Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Aug. 24, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | CPI AEROSTRUCTURES INC | |
Entity Central Index Key | 0000889348 | |
Document Type | 10-Q/A | |
Entity Incorporation, State or Country Code | NY | |
Entity File Number | 1-11398 | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | true | |
Amendment Description | This Amendment No. 1 to our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019 (this "Quarterly Report on Form 10-Q/A") is being filed to amend and restate certain items presented in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019, which was initially filed with the Securities and Exchange Commission (the "SEC") on May 10, 2019 (the "Original Form 10-Q"). | |
Current Fiscal Year End Date | --12-31 | |
Entity's Reporting Status Current | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 11,876,610 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2019 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Current Assets: | ||
Cash | $ 617,161 | $ 4,128,142 |
Restricted cash | 2,000,000 | 2,000,000 |
Accounts receivable, net of allowance for doubtful accounts of $275,000 as of March 31, 2019 and $222,025 as of December 31, 2018 | 6,583,155 | 8,722,571 |
Contract Assets | 19,778,753 | 17,588,866 |
Inventory | 10,740,609 | 9,361,611 |
Refundable income taxes | 434,903 | 434,903 |
Prepaid expenses and other current assets | 1,205,297 | 1,972,630 |
Total current assets | 41,359,878 | 44,208,723 |
Operating lease right-of-use assets | 4,927,810 | |
Property and equipment, net | 3,533,038 | 2,545,192 |
Refundable income taxes | 434,903 | 434,903 |
Other assets | 229,552 | 249,575 |
Total Assets | 50,485,181 | 47,438,393 |
Current Liabilities: | ||
Accounts payable | 12,364,039 | 9,902,481 |
Accrued expenses | 1,089,803 | 1,558,160 |
Contract liabilities | 3,276,653 | 5,252,579 |
Loss reserve | 3,036,682 | 3,663,558 |
Current portion of long-term debt | 2,506,099 | 2,434,981 |
Operating lease liabilities | 1,593,243 | |
Income taxes payable | 42,121 | 113,992 |
Total current liabilities | 23,908,640 | 22,925,751 |
Line of credit | 23,738,685 | 24,038,685 |
Long-term operating lease liabilities | 3,837,678 | |
Long-term debt, net of current portion | 3,601,883 | 3,876,238 |
Other liabilities | 531,124 | |
Total Liabilities | 55,086,886 | 51,371,798 |
Shareholders' Deficit: | ||
Common stock - $.001 par value; authorized 50,000,000 shares, 11,736,386 and 11,718,246 shares, respectively, issued and outstanding | 11,736 | 11,718 |
Additional paid-in capital | 70,917,811 | 70,651,413 |
Accumulated Deficit | (75,531,252) | (74,596,536) |
Total Shareholders' Deficit | (4,601,705) | (3,933,405) |
Total Liabilities and Shareholders' Deficit | $ 50,485,181 | $ 47,438,393 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 50,000,000 | 50,000,000 |
Common stock, issued | 11,736,386 | 11,718,246 |
Common stock, outstanding | 11,736,386 | 11,718,246 |
Accounts receivable, allowance for doubtful accounts | $ 275,000 | $ 222,025 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Revenue | $ 21,988,384 | $ 14,989,951 |
Cost of sales | 19,504,968 | 13,889,474 |
Gross profit | 2,483,416 | 1,100,477 |
Selling, general and administrative expenses | 2,905,686 | 2,094,926 |
Loss from operations | (422,270) | (994,449) |
Interest expense | 510,769 | 447,263 |
Loss before provision for income taxes | (933,039) | (1,441,712) |
Provision for income taxes | 1,677 | 1,195 |
Net Loss | (934,716) | (1,442,907) |
Other comprehensive loss net of tax - Change in unrealized loss on interest rate swap | (5,800) | |
Comprehensive loss | $ (934,716) | $ (1,448,707) |
Loss per common share - basic (in dollars per share) | $ (0.08) | $ (0.16) |
Loss per common share - diluted (in dollars per share) | $ (0.08) | $ (0.16) |
Shares used in computing income per common share: | ||
Basic (in shares) | 11,736,305 | 8,888,179 |
Diluted (in shares) | 11,736,305 | 8,888,179 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) (UNAUDITED) - USD ($) | Common Stock [Member] | Common Stock [Member]As Previously Reported [Member] | Additional Paid-in Capital [Member] | Additional Paid-in Capital [Member]As Previously Reported [Member] | Retained Earnings (Accumulated Deficit) [Member] | Retained Earnings (Accumulated Deficit) [Member]As Previously Reported [Member] | Retained Earnings (Accumulated Deficit) [Member]Restatement Adjustments [Member] | Accumulated Other Comprehensive Loss [Member] | Accumulated Other Comprehensive Loss [Member]As Previously Reported [Member] | Total | As Previously Reported [Member] | Restatement Adjustments [Member] |
Balance, beginning at Dec. 31, 2017 | $ 8,864 | $ 8,864 | $ 53,770,617 | $ 53,770,617 | $ (67,049,783) | $ 20,548,652 | $ (87,598,435) | $ (14,800) | $ (14,800) | $ (13,285,102) | $ 74,313,333 | $ (87,598,435) |
Balance, beginning (in shares) at Dec. 31, 2017 | 8,864,319 | 8,864,319 | ||||||||||
Net loss | (1,442,907) | (1,442,907) | 1,256,765 | (2,699,672) | ||||||||
Change in unrealized loss from interest rate swap | (5,800) | (5,800) | ||||||||||
Common stock issued as employee compensation | $ 5 | (48,006) | (48,001) | |||||||||
Common stock issued as employee compensation (in shares) | 5,130 | |||||||||||
Stock based compensation expense | $ 55 | 303,885 | 303,940 | |||||||||
Stock based compensation expense (in shares) | 54,396 | |||||||||||
Balance, ending at Mar. 31, 2018 | $ 8,924 | 54,026,496 | (68,492,690) | $ (20,600) | (14,477,870) | |||||||
Balance, ending (in shares) at Mar. 31, 2018 | 8,923,845 | |||||||||||
Balance, beginning at Dec. 31, 2018 | $ 11,718 | $ 11,718 | 70,651,413 | $ 70,651,413 | (74,596,536) | $ 22,760,215 | $ (97,356,751) | $ (3,933,405) | 93,423,346 | (97,356,751) | ||
Balance, beginning (in shares) at Dec. 31, 2018 | 11,718,246 | 11,718,246 | 11,718,246 | |||||||||
Net loss | (934,716) | $ (934,716) | 1,658,598 | $ (2,593,314) | ||||||||
Costs related to stock offering | (64,371) | (64,371) | ||||||||||
Common stock issued upon exercise of options (in shares) | 521 | |||||||||||
Stock based compensation expense | $ 18 | 330,769 | 330,787 | |||||||||
Stock based compensation expense (in shares) | 17,619 | |||||||||||
Balance, ending at Mar. 31, 2019 | $ 11,736 | $ 70,917,811 | $ (75,531,252) | $ (4,601,705) | $ 95,348,360 | |||||||
Balance, ending (in shares) at Mar. 31, 2019 | 11,736,386 | 11,736,386 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (934,716) | $ (1,442,907) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 209,261 | 153,297 |
Amortization of debt issuance costs | 36,953 | 21,392 |
Cash expended in excess of rent expense | (28,012) | (17,692) |
Stock-based compensation | 330,787 | 210,028 |
Bad debt expense | 150,000 | |
Common stock issued as employee compensation | 45,913 | |
Changes in operating assets and liabilities: | ||
Decrease in accounts receivable | 2,139,417 | 1,245,407 |
Decrease (increase) in contract assets | (2,189,888) | 395,057 |
Increase in inventory | (1,378,998) | (49,100) |
Decrease in prepaid expenses and other assets | 541,791 | 98,683 |
Increase (decrease) in accounts payable and accrued expenses | 1,993,200 | (3,388,922) |
Increase (decrease) in contract liabilities | (2,353,926) | 32,107 |
Decrease in loss reserve | (626,876) | (27,456) |
Increase (decrease) in income taxes payable | (71,871) | 868 |
Net cash used in operating activities | (2,332,878) | (2,573,325) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (210,695) | (156,006) |
Net cash used in investing activities | (210,695) | (156,006) |
Cash flows from financing activities: | ||
Payments on long-term debt | (603,037) | (418,306) |
Proceeds from line of credit | 2,000,000 | |
Payments on line of credit | (300,000) | |
Stock offering costs paid | (64,371) | |
Net cash (used in) provided by financing activities | (967,408) | 1,581,694 |
Net decrease in cash and restricted cash | (3,510,981) | (1,147,637) |
Cash and restricted cash at beginning of period | 6,128,142 | 1,430,877 |
Cash and restricted cash at end of period | 2,617,161 | 283,240 |
Cash paid during the period for: | ||
Interest | 551,635 | $ 429,614 |
Income taxes | 90,202 | |
Equipment acquired under financing lease | $ 399,800 |
INTERIM FINANCIAL STATEMENTS
INTERIM FINANCIAL STATEMENTS | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
INTERIM FINANCIAL STATEMENTS | 1. INTERIM FINANCIAL STATEMENTS The Company consists of CPI Aerostructures, Inc. (“CPI”) and Welding Metallurgy, Inc. (“WMI”), a wholly owned subsidiary acquired on December 20, 2018 and Compac Development Corporation (“Compac”), a wholly owned subsidiary of WMI, collectively the “Company.” The acquisition of WMI and Compac is referred to throughout this document as the “WMI Acquisition”. An operating segment, in part, is a component of an enterprise whose operating results are regularly reviewed by the chief operating decision maker (the “CODM”) to make decisions about resources to be allocated to the segment and assess its performance. Operating segments may be aggregated only to a limited extent. The Company’s CODM, the Chief Executive Officer, reviews financial information presented on a consolidated basis, accompanied by disaggregated information about revenues for purposes of making operating decisions and assessing financial performance. The Company has determined that it has a single operating and reportable segment. The consolidated financial statements of the Company as of March 31, 2019 and for the three months ended March 31, 2019 and 2018 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and notes normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to those rules and regulations. The consolidated balance sheet as of December 31, 2018 has been derived from audited consolidated financial statements, as restated (see Note 15 and our Annual Report on Form 10-K for the year ended December 31, 2019 for more information on the effect of the restatement) but does not include all of the information and notes required by U.S. GAAP. The Company believes that the disclosures are adequate to make the information presented not misleading. All adjustments that, in the opinion of management, are necessary for a fair presentation for the periods presented have been reflected. Such adjustments are of a normal, recurring nature. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, which we expect to file subsequent to the filing of this Quarterly Report on Form 10Q/A. The results of operations for interim periods are not necessarily indicative of the operating results to be expected for the full year or any other interim period. The Company maintains its cash in five financial institutions. The balances are insured by the Federal Deposit Insurance Corporation. From time to time, the Company’s balances may exceed insurance limits. As of March 31, 2019, the Company had $511,170 of uninsured balances. The Company limits its credit risk by selecting financial institutions considered to be highly creditworthy. The Company applied acquisition accounting for the WMI Acquisition in accordance with Accounting Standards Codification (“ASC”) Topic 805, “Business Combinations” (“ASC 805”). Acquisition accounting requires that the assets acquired and liabilities assumed be recorded at their respective estimated fair values at the date of acquisition. The excess purchase price over fair value of the net assets acquired is recorded as goodwill. In determining estimated fair values, we are required to make estimates and assumptions that affect the recorded amounts including, but not limited to, expected future cash flows, discount rates, remaining useful lives of long-lived assets, useful lives of identified intangible assets, replacement or reproduction costs of property and equipment and the amounts to be recovered in future periods from acquired net operating losses and other deferred tax assets. Our estimates in this area impact, among other items, the amount of depreciation and amortization, impairment charges in certain instances if the asset becomes impaired, and income tax expense or benefit that we report. Our estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain. See Note 2, “Business Combinations” for a summary and status of the application of acquisition accounting. Effective January 1, 2018, the Company adopted Accounting Standards Codification Topic 606, "Revenue from Contracts with Customers" ("ASC 606"), using the modified retrospective method. In accordance with ASC 606, the Company recognizes revenue when it transfers control of a promised good or service to a customer in an amount that reflects the consideration it expects to be entitled to in exchange for the good or service. The majority of the Company’s performance obligations are satisfied over time as the Company (i) sells products with no alternative use to the Company and (ii) has an enforceable right to recover costs incurred plus a reasonable profit margin for work completed to date. Under the over time revenue recognition model, revenue and gross profit are recognized over the contract period as work is performed based on actual costs incurred and an estimate of costs to complete and resulting total estimated costs at completion. The Company also has contracts that are considered point in time. Under the point in time revenue recognition model, revenue is recognized when control of the components has transferred to the customer, in most cases this will be based on shipping terms. The corrected adoption of ASC 606 resulted in a restatement of previously issued consolidated financial statements, see Note 15. See Note 3, “Revenue”, for additional information regarding the Company’s revenue recognition policy. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. Originally, entities were required to adopt ASU 2016-02 using a modified retrospective approach at the beginning of the earliest comparative period presented in the financial statements and the recognition of a cumulative-effect adjustment to the opening balance of retained earnings. The FASB subsequently issued Accounting Standards Update No. 2018-10 and Accounting Standards Update No. 2018-11 in July 2018, which provide clarifications and improvements to ASU 2016-02 (collectively, the “new lease standard”). Accounting Standards Update No. 2018-11 also provides the optional transition method which allows companies to apply the new lease standard at the adoption date instead of at the earliest comparative period presented and continue to apply the provisions of the previous lease standard in its annual disclosures for the comparative periods. The new lease standard requires lessees to present a right-of-use asset and a corresponding lease liability on the balance sheet. Lessor accounting is substantially unchanged compared to the current accounting guidance. Additional footnote disclosures related to leases will also be required. On January 1, 2019, the Company adopted the new lease standard using the optional transition method. The comparative financial information will not be restated and will continue to be reported under the previous lease standard in effect during those periods. In addition, the new lease standard provides a number of optional practical expedients in transition. The Company elected the package of practical expedients. As such, the Company will not reassess whether expired or existing contracts are or contain a lease; will not need to reassess the lease classifications or reassess the initial direct costs associated with expired or existing leases. The Company did not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to the Company. The new lease standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, the Company will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. The Company elected the practical expedient to not separate lease and non-lease components for certain classes of assets (office buildings). On January 1, 2019, the Company recognized ROU assets and lease liabilities of approximately $5.3 million and $5.9 million, respectively, on its consolidated balance sheet using an estimated incremental borrowing rate of 6%. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 3 Months Ended |
Mar. 31, 2019 | |
Business Combinations [Abstract] | |
Business Combinations | 2. Business Combinations As discussed in Note 1, the Company acquired WMI and Compac from Air Industries Group (“Air Industries”) on December 20, 2018. The WMI Acquisition was accounted for as a business combination in accordance with ASC 805. Accordingly, the Company is required to determine and record the estimated fair value of the assets acquired, including any potential intangible assets, and liabilities assumed at the date of acquisition. The acquisition was considered a stock purchase for tax purposes. The purchase price for the acquisition was $7.9 million, which was subject to a post-closing working capital adjustment. $2 million dollars of the purchase price was placed in escrow at closing and may be released after the completion of the working capital adjustment and for the indemnification contingencies. The escrowed amount is shown as restricted cash on the consolidated balance sheet as of March 31, 2019. The working capital adjustment is based on the historical values of components of working capital as defined in the Stock Purchase Agreement (“SPA”). We calculated a post-closing working capital adjustment. Air Industries formally objected to our calculation. The SPA provided the parties 30 days to come to an agreement on the working capital adjustment, required that any areas of disagreement exceeding the 30 days must be submitted for a binding resolution to BDO USA, LLP (“BDO”) and provided that BDO would have a period of 30 days to resolve the disputes and determine the final working capital adjustment. As of March 31, 2019, the Company was in process of determining the fair values of the assets and liabilities acquired and had recorded provisional estimates as of the acquisition date. As the Company completes this process and additional information becomes known concerning the acquired assets and assumed liabilities, management will likely make adjustments to the fair value of the amounts provisionally recorded in the opening balance sheet of WMI during the measurement period, which is no longer than a one-year period following the acquisition date. The determination of the fair values of the acquired assets and liabilities assumed (and the related determination of estimated lives of depreciable tangible and identifiable intangible assets) requires significant judgment. If the final aggregate fair value of the net assets acquired is less than the final purchase price paid, then the Company may be required to record goodwill. Conversely, if the final aggregate fair value of the net assets acquired is in excess of the final purchase price paid, then the Company may potentially conclude that the purchase of WMI was a “bargain purchase.” As stated above, as of March 31, 2019, the Company determined the following provisional estimates of the fair value of the assets acquired and liabilities assumed from WMI: Provisional Fair Values Other current assets $ 1,049,000 Accounts receivable 1,522,000 Inventory 7,969,000 Property and equipment, net 586,000 Current liabilities (5,174,000 ) Total $ 5,952,000 Please see Note 14, “Subsequent Events” for additional discussion and final fair value of assets and liabilities assumed from WMI and the working capital dispute between CPI and Air Industries. The following table presents the unaudited pro forma revenue and net income for the period presented as if the WMI Acquisition had occurred on January 1, 2018, based on the provisional estimates of the fair value of the net assets acquired: March 31, 2018 Revenue $ 17,532,728 Net Loss $ (1,859,365 ) |
REVENUE RECOGNITION
REVENUE RECOGNITION | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | 3. REVENUE RECOGNITION Contracts with Customers and Performance Obligations The majority of the Company’s revenues are from long-term contracts with the U.S. government and commercial contractors. The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. For the Company, the contract under ASC 606 is typically established upon execution of a purchase order either in accordance with a long-term customer contract or on a standalone basis. To determine the proper revenue recognition for our contracts, we must evaluate whether two or more contracts should be combined and accounted for as a single contract, and whether the combined or single contract should be accounted for as one performance obligation or more than one performance obligation. This evaluation requires significant judgment and the decision to combine a group of contracts or to separate a contract into multiple performance obligations could change the amount of revenue and profit recorded in a period. A performance obligation is a promise within a contract to transfer a distinct good or service to the customer in exchange for payment and is the unit of account for recognizing revenue. The Company’s performance obligations in its contracts with customers are typically the sale of each individual product contemplated in the contract or a single performance obligation representing a series of products when the contract contains multiple products that are substantially the same. The Company has elected to account for shipping performed after control over a product has transferred to a customer as fulfillment activities. When revenue is recognized in advance of incurring shipping costs, the costs related to the shipping are accrued. Shipping costs are included in costs of sales. The Company provides warranties on many of its products; however, since customers cannot purchase such warranties separately and they do not provide services beyond standard assurances, warranties are not separate performance obligations. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when or as the performance obligation is satisfied. For contracts with more than one performance obligation, the Company allocates the transaction price to each performance obligation based on its estimated standalone selling price. When standalone selling prices are not available, the transaction price is allocated using an expected cost plus margin approach as pricing for such contracts is typically negotiated on the basis of cost. The contracts with the U.S. government typically are subject to the FAR which provides guidance on the types of costs that are allowable in establishing prices for goods and services provided under U.S. government contracts. The pricing for commercial contractors are based on the specific negotiations with each customer and any taxes imposed by governmental authorities are excluded from revenue. The transaction price is primarily comprised of fixed consideration as the customer typically pays a fixed fee for each product sold. The Company does not adjust the amount of revenue to be recognized under a customer contract for the effects of the time value of money when the timing difference between receipt of payment and transferring the good or service is less than one year. The majority of the Company’s performance obligations are satisfied over time as the Company (i) sells products with no alternative use to the Company and (ii) has an enforceable right to recover costs incurred plus a reasonable profit margin for work completed to date. The Company uses the cost-to-cost input method to measure progress for its performance obligations because it best depicts the transfer of control to the customer which occurs as the Company incurs costs on its contracts. The Company generally utilizes the portfolio approach to estimate the amount of revenue to recognize for its contracts and groups contracts together that have similar characteristics. Significant judgment is used to determine which contracts are grouped together to form a portfolio. The portfolio approach is utilized only when the result of the accounting is not expected to be materially different than if applied to individual contracts. The Company’s contracts are often modified to account for changes in contract specifications and requirements. The Company considers contract modifications to exist Contract Estimates Certain contracts contain forms of variable consideration, such as price discounts and performance penalties. The Company generally estimates variable consideration using the most likely amount based on an assessment of all available information (i.e., historical experience, current and forecasted performance) and only to the extent it is probable that a significant reversal of revenue recognized will not occur when the uncertainty is resolved. In applying the cost-to-cost input method, the Company compares the actual costs incurred relative to the total estimated costs expected at completion to determine its progress towards satisfying its performance obligation and to calculate the corresponding amount of revenue to recognize. For any costs incurred that do not depict the Company’s performance in transferring control of goods or services to the customer, the Company excludes such costs from its input method measure of progress as the amounts are not reflected in the price of the contract. Costs that are inputs to the satisfaction of a performance obligation include labor, materials and subcontractors’ costs, other direct costs and an allocation of indirect costs. Changes to the original estimates may be required during the life of the contract. Estimates are reviewed quarterly and the effect of any change in the estimated gross margin percentage for a contract is reflected in revenue in the period the change becomes known. ASC 606 involves considerable use of estimates and judgment in determining revenues, costs and profits and in assigning the amounts to accounting periods. For instance, management must make assumptions and estimates regarding labor productivity and availability, the complexity of the work to be performed, the availability of materials, the length of time to complete the performance obligation, execution by our subcontractors, the availability and timing of funding from the customer, and overhead cost rates, among other variables. The Company continually evaluates all of the factors related to the assumptions, risks and uncertainties inherent with the application of the cost-to-cost input method; however, it cannot be assured that estimates will be accurate. If estimates are not accurate, or a contract is terminated which will affect estimates at completion, the Company is required to adjust revenue in the period the change is determined. When changes are required for the estimated total revenue on a contract, these changes are recognized on a cumulative catch-up basis in the current period. A significant change in one or more estimates could affect the profitability of one or more of our performance obligations. If estimates of total costs to be incurred exceed estimates of total consideration the Company expects to receive, a provision for the remaining loss on the contract is recorded in the period in which the loss becomes evident. Capitalized Contract Acquisition Costs and Fulfillment Costs Contract acquisition costs are those incremental costs that the Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. The Company does not typically incur contract acquisition costs or contract fulfillment costs that are subject to capitalization in accordance with the guidance in Accounting Standards Codification Subtopic 340-40, “Other Assets and Deferred Costs—Contracts with Customers.” Disaggregation of Revenue The following tables present the Company’s revenue disaggregated by contract type: Three months ended March 31, 2019 2018 Aerostructures $ 10,080,873 $ 8,842,220 Aerosystems 8,123,468 2,718,088 Kitting and Supply Chain Management 3,784,043 3,429,643 $ 21,988,384 $ 14,989,951 Transaction Price Allocated to Remaining Performance Obligations As of March 31, 2019, the aggregate amount of transaction price allocated to the remaining performance obligations was approximately $113.5 million. This represents the amount of revenue the Company expects to recognize in the future on contracts with unsatisfied or partially satisfied performance obligations as of March 31, 2019. The Company estimates that it will recognize approximately 63% of this amount in fiscal year 2019 and the remainder by fiscal year 2022. |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | 4. lEases The Company leases a building and equipment. Under ASC 842, at contract inception we determine whether the contract is or contains a lease and whether the lease should be classified as an operating or a financing lease. Operating leases are included in ROU assets and operating lease liabilities in our consolidated balance sheets. The Company leases manufacturing and office space under an agreement classified as an operating lease. The lease agreement expires on April 30, 2022 and does not include any renewal options. The agreement provides for an initial monthly base amount plus annual escalations through the term of the lease. In addition to the monthly base amounts in the lease agreement, the Company is required to pay real estate taxes and operating expenses during the lease terms. The Company also leases office equipment in agreements classified as operating leases. For the three months ended March 31, 2019, the Company’s operating lease expense was $438,328. Future minimum lease payments under non-cancellable operating leases as of March 31, 2019 were as follows: Twelve months ending March 31, 2020 $ 1,875,995 2021 1,918,838 2022 1,951,687 2023 222,922 2024 6,028 Total undiscounted operating lease payments 5,975,470 Less imputed interest 544,549 Present value of operating lease payments $ 5,430,921 The following table sets forth the ROU assets and operating lease liabilities as of March 31, 2019: Assets ROU Assets $ 4,927,810 Liabilities Current operating lease liabilities $ 1,593,243 Long-term operating lease liabilities 3,837,678 Total ROU liabilities $ 5,430,921 The Company’s weighted average remaining lease term for its operating leases is 3.4 years. |
RECONCILIATION OF CASH AND REST
RECONCILIATION OF CASH AND RESTRICTED CASH | 3 Months Ended |
Mar. 31, 2019 | |
Cash and Cash Equivalents [Abstract] | |
RECONCILIATION OF CASH AND RESTRICTED CASH | 5. reconciliation of cash and restricted casH The following table provides a reconciliation of cash and restricted cash reported within the consolidated statement of cash flows that sum to the total of the same such amounts shown in the statement of cash flows: March 31, 2019 March 31, 2018 Cash $ 617,161 $ 283,240 Restricted cash 2,000,000 — Total cash and restricted cash shown in the consolidated statement of cash flow $ 2,617,161 $ 283,240 |
INVENTORY
INVENTORY | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Disclosure [Abstract] | |
INVENTORY | 6. inventory The components of inventory consisted of the following: March 31, 2019 December 31, 2018 Raw materials $ 2,867,039 $ 2,591,872 Work in progress 5,590,480 4,015,028 Finished goods 2,283,090 2,754,711 Total $ 10,740,609 $ 9,361,611 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
STOCK BASED COMPENSATION | 7. stock-based compensation The Company accounts for stock-based compensation based on the fair value of the stock or stock-based instrument on the date of grant. In January 2019, the Company granted 75,350 restricted stock units (“RSUs”) to its board of directors as partial compensation for the 2019 year. In January 2018, the Company granted 58,578 RSUs to its board of directors as partial compensation for the 2018 year. RSUs vest quarterly on a straight-line basis over a one-year period. The Company’s net loss for the three months ended March 31, 2019 and 2018 includes approximately $250,000 and $273,000, respectively, of non-cash compensation expense related to the RSU grants to the board of directors. This expense is recorded as a component of selling, general and administrative expenses. In January 2018, the Company granted 5,130 shares of common stock to various employees. For the three months ended March 31, 2018, approximately $10,000 of compensation expense is included in selling, general and administrative expenses and approximately $36,000 of compensation expense is included in cost of sales for this grant. In March 2018, the Company granted 68,764 shares of common stock to various employees. In the event that any of these employees voluntarily terminates their employment prior to certain dates, portions of the shares may be forfeited. In addition, if certain Company performance criteria are not achieved, portions of these shares may be forfeited. These shares will be expensed during various periods through March 2022 based upon the service and performance thresholds. For the three months ended March 31, 2019, approximately $85,000 of compensation expense is included in selling, general and administrative expenses and approximately $16,100 of compensation expense is included in cost of sales for this grant. For the three months ended March 31, 2018, approximately $76,600 of compensation expense is included in selling, general and administrative expenses and approximately $16,100 of compensation expense is included in cost of revenue for this grant. On February 12, 2019, these employees returned 1,221 common shares, valued at approximately $7,893, to pay the employees’ withholding taxes. In March 2018, 12,330 and 9,130 of the shares granted in 2016 and 2017, respectively, were forfeited because the Company failed to achieve certain performance criteria for the year ended December 31, 2017. In addition, on March 22, 2018, these employees returned 7,552 common shares, valued at approximately $62,000, to pay the employees’ withholding taxes. A summary of the status of the Company’s stock option plans as of March 31, 2019 and changes during the three months ended March 31, 2019 is as follows: Options Weighted Weighted Aggregate Outstanding at beginning of period 41,772 $ 7.58 — — Exercised during the period 35,000 $ 6.60 — — Outstanding and exercisable at end of period 6,772 $ 12.67 0.25 $ — During the three months ended March 31, 2019, 35,000 stock options were exercised, pursuant to the provisions of the stock option plan, where the Company received no cash and 34,478 shares of its common stock in exchange for the 35,000 shares issued in the exercise. The 34,478 shares that the Company received were valued at $231,003, the fair market value of the shares on the date of exercise. During the three months ended March 31, 2018, no stock options were granted or exercised. |
FAIR VALUE
FAIR VALUE | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value | 8. Fair Value Fair Value At March 31, 2019 and December 31, 2018, the fair values of cash, accounts receivable, accounts payable and accrued expenses approximated their carrying values because of the short-term nature of these instruments. March 31, 2019 (restated) Carrying Amount Fair Value Debt Line of credit and long-term debt $ 29,846,667 $ 29,846,667 December 31, 2018 (restated) Carrying Amount Fair Value Debt Line of credit and long-term debt $ 30,349,904 $ 30,349,904 We estimated the fair value of debt using market quotes and calculations based on market rates. |
CONTRACT ASSETS AND CONTRACT LI
CONTRACT ASSETS AND CONTRACT LIABILITIES | 3 Months Ended |
Mar. 31, 2019 | |
Contract Assets And Contract Liabilities | |
CONTRACT ASSETS AND CONTRACT LIABILITIES | 9. Contract assets and contract liabilities Contract assets represent revenue recognized on contracts in excess of amounts invoiced to the customer and the Company’s right to consideration is conditional on something other than the passage of time. Amounts may not exceed their net realizable value. Under the typical payment terms of our government contracts, the customer retains a portion of the contract price until completion of the contract, as a measure of protection for the customer. Our government contracts therefore typically result in revenue recognized in excess of billings, which we present as contract assets. Contract assets are classified as current. The Company’s contract liabilities represent customer payments received or due from the customer in excess of revenue recognized. Contract liabilities are classified as current. Revenue recognized for the period ended March 31, 2019 and March 31, 2018, that was included in the contract liabilities balance as of January 1, 2019 was $5.2 million and as of January 1, 2018 was $8,000. |
LOSS PER COMMON SHARE
LOSS PER COMMON SHARE | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
LOSS PER COMMON SHARE | 10. Loss PER COMMON SHARE Basic loss per common share is computed using the weighted average number of common shares outstanding. Diluted loss per common share for the three months ended March 31, 2019 and 2018 is computed using the weighted-average number of common shares outstanding adjusted for the incremental shares attributed to outstanding options to purchase common stock, as well as unvested RSUs. Incremental shares of 56,513 were not used in the calculation of diluted loss per common share in the three months ended March 31, 2019, as the Company is at a loss position and these shares would be considered anti-dilutive. Incremental shares of 6,772 were not used in the calculation of diluted loss per common share in the three months ended March 31, 2019, as their exercise price was in excess of the Company’s average stock price for the respective period and, accordingly, these shares are not assumed to be exercised for the diluted earnings per share calculation, as they would be anti-dilutive. Incremental shares of 78,933 were not used in the calculation of diluted loss per common share in the three months ended March 31, 2018, as the Company is at a loss position and these shares would be considered anti-dilutive. Incremental shares of 45,249 were not used in the calculation of diluted loss per common share in the three months ended March 31, 2018, as their exercise price was in excess of the Company’s average stock price for the respective period and, accordingly, these shares are not assumed to be exercised for the diluted earnings per share calculation, as they would be anti-dilutive. |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
DEBT | 11. Debt On March 24, 2016, the Company entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) with BankUnited, N.A. as a lender and the sole arranger, administrative agent and collateral agent and Citizens Bank N.A. as a lender (the “BankUnited Facility”). The BankUnited Facility provided for a revolving credit loan commitment of $30 million (the “Revolving Loan”) and a $10 million term loan (“Term Loan”). The Revolving Loan bears interest at a rate based upon a pricing grid, as defined in the agreement. As of March 31, 2019, the Company had $23.7 million outstanding under the Revolving Loan bearing interest at 6.25%. As of March 31, 2019, the Revolving Loan had a maturity date of June 30, 2020. The Company has cumulatively paid approximately $463,000 of total debt issuance costs in connection with the BankUnited Facility, of which approximately $121,000 is included in other assets and $37,000 is a reduction of long-term debt at March 31, 2019. The Term Loan had an initial amount of $10 million, payable in monthly installments, as defined in the agreement, as of March 31, 2019, had a maturity date of June 30, 2020. The maturities of long-term debt (excluding unamortized debt issuance costs) are as follows: Twelve months ending March 31, 2020 $ 2,506,099 2021 3,131,789 2022 204,065 2023 179,055 Thereafter 86,974 Total $ 6,107,982 As of March 31, 2019, the Company was not in compliance with the financial covenants contained in the BankUnited Facility, as amended. BankUnited has subsequently waived these covenant violations in conjunction with execution of the Sixth Amendment, which further amends the Credit Agreement, Revolving Note and Term Note, extended the maturity dates of the Revolving Loan and Term Loan, converted $6 million of the principal outstanding under the Revolving Loan into principal outstanding under the Term Loan and made a corresponding reduction to the availability under the Revolving Loan by $6 million, and amended certain covenants and other provisions of the BankUnited Facility. See Note 14, “Subsequent Events”. The BankUnited Facility is secured by all of the Company’s assets. In addition to the Term Loan, included in long-term debt are financing leases and notes payable of $1,236,697, including a current portion of $406,099. |
MAJOR CUSTOMERS
MAJOR CUSTOMERS | 3 Months Ended |
Mar. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
MAJOR CUSTOMERS | 12. MAJOR CUSTOMERS During the three months ended March 31, 2019, the Company’s four largest customers accounted for 27% 14%, 13% and 11% of revenue. During the three months ended March 31, 2018, the Company’s four largest customers accounted for 26%, 14%, 14% and 11% of revenue. At March 31, 2019, 34%, 14%, 12%, 12% and 10% of contract assets were from the Company’s five largest customers. At December 31, 2018, 53%, 21% and 10% of contract assets were from the Company’s three largest customers. At March 31, 2019, 24%, 16%, 15% and 10% of our accounts receivable were from our four largest customers. At December 31, 2018, 18%, 16%, 14% and 14% of accounts receivable were from our four largest customers. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 13. Income taxes In February 2019, the Company received information that the net operating loss carryback that was generated in 2014 and carried back to 2012-13 was under examination and could possibly be disallowed by the IRS. As of June 2020, the Company has received notification that the returns will be accepted as filed. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 14. SUBSEQUENT EVENTS Restatement Liquidity On August 24, 2020, we entered into a Sixth Amendment and Waiver (“Sixth Amendment”) to our Credit Agreement with BankUnited. In connection with the Sixth Amendment, we also amended the Amended and Restated Revolving Credit Note, dated as of March 24, 2016, which represents an aggregate principal revolving loan commitment amount of $30 million (“Revolving Note”) and the Amended and Restated Term Note, dated as of March 24, 2016, with an original principal amount of $10 million (“Term Note”). Under the Sixth Amendment, and the related amendments to the Revolving Note and Term Note, an aggregate of $6 million of the outstanding balance under the Revolving Note was converted into and added to the outstanding balance on the Term Note. The availability under the Revolving Note was permanently reduced by $6 million, to $24 million, and the outstanding principal amount on the Term Note was increased to approximately $7,933,000. Additionally, under the Sixth Amendment, the parties amended the Credit Agreement by (i) extending the maturity date of the Revolving Note and Term Note to May 2, 2022, and making conforming changes to the payment schedule on the Term Note, (ii) amending the fixed charge coverage ratio covenant by requiring the ratio to be quarterly for September 30, 2020 and December 31, 2020 and then determined on a trailing twelve-month basis beginning on March 31, 2021, (iii) waiving the leverage covenant noncompliance for each quarter ended during the period from March 31, 2018 through December 31, 2019. The leverage covenant will not be tested for the four quarters from March 31, 2020 through December 31, 2020. Then beginning with the quarter ending March 31, 2021 the funded debt to EBITDA ratio shall be 4.0:1.0, tested on a trailing four quarter basis, (iv) reducing the minimum quarterly EBITDA covenant from $2 million to $1 million beginning on September 30, 2020, (v) maintaining a minimum net income, after taxes, of no less than $1.00, and (vi) replacing the interest pricing grid for the Revolving Note with an interest rate for Eurodollar loans of LIBOR plus 3.25% with a floor of 50 basis points or an interest rate for base rate loans equal to BankUnited’s prime rate plus 0.25%. Additionally, on April 10, 2020, the Company entered into a loan with BNB Bank as the lender (“Lender”) in an aggregate principal amount of $4,795,000 (“PPP Loan”) pursuant to the Paycheck Protection Program, part of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The PPP Loan is evidenced by a promissory note (“Note”). Subject to the terms of the Note, the PPP Loan bears interest at a fixed rate of one percent (1%) per annum, with the first six months of interest deferred, has an initial term of two years, and is unsecured and guaranteed by the Small Business Administration. The Company may apply to the Lender for forgiveness of the PPP Loan, with the amount which may be forgiven equal to the sum of payroll costs, covered rent and mortgage obligations, and covered utility payments incurred by the Company during the 24-week period beginning on April 10, 2020, calculated in accordance with the terms of the CARES Act, as modified by the Paycheck Protection Flexibility Act. The Note provides for customary events of default including, among other things, cross-defaults on any other loan with the Lender. The PPP Loan may be accelerated upon the occurrence of an event of default. COVID-19 There are many uncertainties regarding the COVID-19 pandemic, and the Company is closely monitoring the impact of the pandemic on all aspects of its business, including how it will impact its employees, customers, suppliers, and liquidity. On March 20, 2020, the Company was notified that it was considered part of the Defense Industrial Base Essential Critical Infrastructure Workforce, and as such has remained open during the COVID-19 pandemic. However, the COVID-19 pandemic has affected our operations, as described elsewhere in this Quarterly Report on Form 10-Q/A, and the extent to which COVID-19 may affect our operations in future periods will depend on future developments, which are highly uncertain, including the duration of the outbreak, new information which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or address its impact, among others. The Company is unable to predict the impact that COVID-19 will have on its financial position and operating results. NYSE American Filing Delinquency On April 17, 2020, we received a notice from NYSE Regulation, Inc. stating that, because we failed to file restated financial statements for the Non-Reliance Periods on or before April 14, 2020, we were not in compliance with the NYSE American exchange’s continued listing standards under the timely filing criteria included in Section 1007 of the Company Guide. In accordance with Section 1007 of the Company Guide, we have six months from April 15, 2020, or until October 15, 2020, to file restated financial statements for the Non-Reliance Periods. The Annual Report on Form 10-K, which we will file immediately after the filing of this Quarterly Report on Form 10-Q/A, along with this Quarterly Report on Form 10-Q/A and the Quarterly Reports on Forms 10-Q/A for the quarters ended June 30, 2019 and September 30, 2019, together constitute such filing and, accordingly, as of the date of this filing we expect to regain compliance with the NYSE American exchange’s continued listing standards. G650 Order Stop-Work and Status On April 29, 2020, the Company received a letter from Triumph Group stating that due to the COVID-19 pandemic, it had received a significant schedule change from its customer, Gulfstream Aerospace, and requested CPI Aero immediately stop work on the contract we have to produce certain fixed leading edge assemblies on the wing of the G650 business jet. In May 2020, Triumph Group cancelled nearly all open orders with the Company, decreasing our G650 leading edge backlog by $3.6 million. On May 27, 2020, Triumph Group announced it had reached an agreement in principle to sell the G650 wing program to Gulfstream Aerospace. On June 12, 2020, the Company received a joint communication from Gulfstream Aerospace and Triumph Group that stated Gulfstream’s intention at the conclusion of the transaction is to continue to purchase G650 wing components from the Company and that they would provide further details to the Company in the coming weeks. The Company is unable to predict when the transaction between Gulfstream and Triumph Group will close or when Gulfstream will begin purchasing G650 wing components from us, if at all. Business Combinations The purchase price for the acquisition was $7.9 million, which was subject to a post-closing working capital adjustment. $2 million dollars of the purchase price was placed in escrow at closing and was to be released after the completion of the working capital adjustment and for the indemnification contingencies. The working capital adjustment is based on the historical values of components of working capital as defined in the SPA. The Company calculated a post-closing working capital adjustment. Air Industries formally objected to the calculation. The SPA provided the parties 30 days to come to an agreement on the working capital adjustment. The Company and Air Industries could not come to an agreement within the time specified and the issues were submitted to BDO for a binding resolution. During the course of BDO’s work, Air Industries conceded on three of the four items of contention, leaving only the inventory valuation in dispute. In its report dated September 3, 2019, BDO found in favor of the Company and that there should be no changes to the Closing Working Capital Statement as prepared by the Company. The result of the conceded items and BDO determination would decrease the purchase price of the acquisition by approximate $4.1 million. On September 16, 2019, the Company received a letter from Air Industries acknowledging the conceded items and, among other things, rejecting the determination by BDO. On September 27, 2019, the Company filed a notice of motion in the Supreme Court of the State of New York, County of New York, against Air Industries seeking, among other things, an order of specific performance requiring Air Industries to comply with its obligations under the SPA and Escrow Agreement and a judgment against Air Industries in the amount of approximately $4.1 million . The parties argued the motion before the court on February 5, 2020. The court’s decision is pending. In October 2019, Air Industries and the Company jointly authorized the release of approximately $619,000 from escrow, which represents the value of the conceded items. The remaining escrowed amount of $1,381,000 is shown as restricted cash on the consolidated balance sheet as of December 31, 2019. The additional disputed amount of approximately $2.1 million is not on the Company’s consolidated balance sheet due to the uncertainty of collection. In the fourth quarter of 2019, the Company recorded adjustments to the provisional estimates of the fair value of the assets acquired and liabilities assumed from WMI related to the BDO determination. Due to new information discovered during the measurement period, adjustments were made to the current period. The Company has determining the fair values of the assets and liabilities acquired and has recorded the fair value of the assets acquired as of December 31 2019 assuming only the collection of the remaining amount escrowed. Collection of the additional $2.1 million is uncertain. Legal Proceedings Working Capital Dispute On September 27, 2019, the Company filed a notice of motion in the Supreme Court of the State of New York, County of New York against Air Industries in connection with a working capital dispute. The Company is seeking, among other things, (i) an order of specific performance requiring Air Industries to comply with its obligations under the Stock Purchase Agreement entered into between the Company and Air Industries on March 21, 2018 and the Escrow Agreement entered into between the Company and Air Industries on December 20, 2018, and (ii) a judgment against Air Industries in the amount of approximately $3.6 million. The parties argued the motion before the court on February 5, 2020. The court’s decision is pending. Class Action Lawsuit On February 24, 2020, Mark A. Rodriguez, a purported stockholder, filed a putative class action lawsuit against the Company, Douglas McCrosson, the Company’s Chief Executive Officer, and Vincent Palazzolo, the Company’s former Chief Financial Officer, in the United States District Court for the Eastern District of New York, . On February 25, 2020, Russell Garrett, a purported stockholder, filed a second putative class action lawsuit against the Company and Messrs. McCrosson and Palazzolo, in the United States District Court for the Eastern District of New York, arising out of the same alleged facts. Each plaintiff seeks to represent a class of stockholders who purchased or otherwise acquired the Company’s common stock from May 15, 2018 to February 14, 2020 (“Class Period”). The complaints are almost identical. Both complaints generally allege that the defendants violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated by the SEC by making false and misleading statements in the Company’s periodic reports filed during the Class Period and seek unspecified damages. On May 5, 2020, the court consolidated these two lawsuits. The court also appointed a lead plaintiff and approved plaintiff's selection of lead counsel. On May 20, 2020, the court ordered plaintiff to file a consolidated amended complaint within 30 days of the Company’s issuance of its restated financials. Shareholder Derivative Action On May 7, 2020, a shareholder derivative action was filed against current members of our board of directors and certain of our current and former officers in the United States District Court for the Eastern District of New York. The complaint, which is based substantially on the facts alleged in the class action complaints summarized above, purports to assert derivative claims against the individual defendants for violations of Section 10(b) and 21(d) of the Exchange Act and breach of fiduciary duty, and seeks to recover on behalf of the Company for any liability the Company might incur as a result of the individual defendants’ alleged misconduct. The complaint also seeks declaratory, equitable, injunctive and monetary relief, and attorneys’ fees and other costs. On June 16, 2020, the court ordered plaintiff to file a consolidated amended complaint within 60 days of the Company’s issuance of its restated financials. While the outcome of any litigation is inherently uncertain and the class action and derivative litigation are each still at an early stage, the Company and its officers and directors intend to vigorously defend against the claims and believe the claims are without merit. Books and Records Action On June 5, 2020, a lawsuit to compel inspection of books and records was filed against the Company in the Supreme Court of New York State, Suffolk County, captioned Berger v. CPI Aerostructures, Inc. The complaint, which is based substantially on the facts alleged in the class action complaints summarized above, seeks to compel the inspection of corporate books and records pursuant to New York common law. The complaint also seeks attorneys’ fees and other costs. The Company’s deadline to answer, move or otherwise respond to the complaint is August 31, 2020. SEC Investigation On May 22, 2020, the Company received a letter (the “SEC Letter”) from the SEC Division of Enforcement (the “Division”) indicating that the Division staff is conducting an investigation involving the Company. The SEC Letter states that the investigation is a non-public, fact finding inquiry where the Division staff is trying to determine whether there have been any violations of federal securities laws. As part of this investigation, the Division issued a subpoena to the Company seeking documents and information relating, among other things, to previously-disclosed errors in and restatements of, the Company’s financial statements, the Company’s October 16, 2018 equity offering and the recent separation of the Company’s former Chief Financial Officers. The SEC Letter states that the investigation and the subpoena do not mean that the Division staff has concluded that the Company or anyone else have violated the federal securities laws and that the investigation does not mean that the Division staff has a negative opinion of any person, entity or security. We intend to fully cooperate with the Division staff. We cannot predict the length, scope, or results of the investigation or the impact, if any, of the investigation on our results of operations. |
RESTATEMENT OF PREVIOUSLY ISSUE
RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS | 15. RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS On February 14, 2020, the Company filed a Form 8-K disclosing that the Audit & Finance Committee of the Company’s Board of Directors determined, based on the recommendation of management, that the Company’s consolidated financial statements which were included in its annual report on Form 10-K for the year ended December 31, 2018, quarterly reports on Forms 10-Q for the quarters ended March 31, 2018, June 30, 2018, and September 30, 2018 and quarterly reports on Forms 10-Q for the quarters ended March 31, 2019, June 30, 2019, and September 30, 2019 and related financial information should no longer be relied upon, and determined that the consolidated financial statements will be restated. The errors were uncovered as part of the preparation of the Company’s consolidated financial statements for the fiscal year ended December 31, 2019. As a result, the Company restated the 2018 consolidated financial statements, which is referred to as the “Restatement.” The Restatement corrects errors which are discussed in detail within this footnote. The errors primarily related to the timing of recognition of revenue from contracts with customers. Restatement The following is a discussion of the restatement adjustments that were made to the Company’s previously issued March 31, 2019 and March 31, 2018 consolidated financial statements. (a) Revenue recognition The Company recognizes revenues and profits for contracts with customers using the cost-to-cost percentage of completion method of accounting. Historically, for long-term programs, the Company applied the cost-to-cost percentage of completion method at the program level, that is, for the entire duration of expected production activity on a particular program. The Company estimated its revenue recognition utilizing the life of the program to both measure progress and estimate profit margin. Under this approach, the Company estimated the total expected customer purchases over the life of the program, which included unexercised and non-binding customer purchase options, which resulted in the recognition of $103.8 million and $100.9 million of misstated contract assets, contract liabilities and loss reserves for the three months ended March 31, 2019 and year ended December 31, 2018, respectively. The Company has now concluded that its life of the program accounting was not an appropriate application of ASC Topic 606. Under ASC Topic 606, the performance obligation is the appropriate unit of accounting. The Company identifies performance obligations to customers once a contract is established in accordance with ASC Topic 606. For the Company, the contract under ASC Topic 606 is typically established upon execution of a purchase order either in accordance with a long-term customer agreement or on a standalone basis. The transaction price is also determined at the contract level and excludes amounts related to unexercised customer options. Similarly, the Company’s cost-to-cost input method to measure progress must consider only the costs incurred relative to the total expected costs of satisfying the performance obligations identified in the contract, exclusive of unexercised customer options. To correct these errors, the related revenue was reversed in the period in which the accounting errors took place and recognized in subsequent periods as control of the goods or services in the contract passed to the customer over time based on a cost-to-cost input method measure of progress. Additionally, certain adjustments to contract assets and contract liabilities were made to the consolidated balance sheet at the end of the period in which the accounting errors occurred. (b) Other The Company corrected other immaterial misstatements relating to previously unrecorded audit adjustments. (c) Income taxes The Company has recorded tax adjustments related to the impact of the Restatement. Impact on Consolidated Statements of Operations The effect of the Restatement described above on the accompanying consolidated statements of operations for the three months ended March 31, 2019 and 2018 is as follows: Three Months Ended March 31, 2018 As Previously Revenue Income As Reported Recognition Other Taxes Restated Revenue $ 18,191,623 $ (3,201,672 ) $ — $ — $ 14,989,951 Cost of sales 14,141,755 27,862 (280,143 ) — 13,889,474 Gross profit 4,049,868 (3,229,534 ) 280,143 — 1,100,477 Selling, general and administrative expenses 2,049,840 — 45,086 — 2,094,926 Income (loss) from operations 2,000,028 (3,229,534 ) 235,057 — (994,449 ) Interest expense 447,263 — — — 447,263 Income (loss) before provision for (benefit from) income taxes 1,552,765 (3,229,534 ) 235,057 — (1,441,712 ) Provision for (benefit from) income taxes 296,000 — — (294,805 ) 1,195 Net income (loss) 1,256,765 (3,229,534 ) 235,057 294,805 (1,442,907 ) Other comprehensive loss net of tax–Change in unrealized loss interest rate swap on int on interest rate swap (5,800 ) — — — (5,800 ) Comprehensive income (loss) $ 1,250,965 $ (3,229,534 ) $ 235,057 $ 294,805 $ (1,448,707 ) Income (loss) per common share – basic $ 0.14 $ (0.16 ) Income (loss) per common share – diluted $ 0.14 $ (0.16 ) Shares used in computing earnings (loss) per common share: Basic 8,888,179 8,888,179 Diluted 8,940,385 8,888,179 Three Months Ended March 31, 2019 As Previously Revenue Other Income As Restated Revenue $ 25,583,531 $ (3,595,147 ) $ — $ — $ 21,988,384 Cost of sales 20,167,721 (662,753 ) — — 19,504,968 Gross profit 5,415,810 (2,932,394 ) — — 2,483,416 Selling, general and administrative expenses 2,806,443 — 99,243 — 2,905,686 Income (loss) from operations 2,609,367 (2,932,394 ) (99,243 ) — (422,270 ) Interest expense 510,769 — — — 510,769 Income (loss) before provision for (benefit from) income taxes 2,098,598 (2,932,394 ) (99,243 ) — (933,039 ) Provision for (benefit from) income taxes 440,000 — — (438,323 ) 1,677 Net income (loss) $ 1,658,598 $ (2,932,394 ) $ (99,243 ) $ 438,323 $ (934,716 ) Income per common share – basic $ 0.14 $ (0.08 ) Income per common share – diluted $ 0.14 $ (0.08 ) Shares used in computing earnings per common share: Basic 11,736,305 11,736,305 Diluted 11,792,818 11,736,305 Impact on Consolidated Balance Sheets The effect of the Restatement described above on the accompanying consolidated balance sheets as of March 31, 2019 and December 31, 2018 is as follows: As of March 31, 2019 As Previously Reported Revenue Other Income As Restated ASSETS Current Assets: Cash $ 617,161 $ — $ — $ — $ 617,161 Restricted cash 2,000,000 — — — 2,000,000 Accounts receivable, net 6,583,155 — — — 6,583,155 Contract assets 120,749,918 (100,971,165 ) — — 19,778,753 Inventory 11,090,995 — (350,386 ) — 10,740,609 Refundable income taxes 435,000 — — (97 ) 434,903 Prepaid expenses and other current assets 1,205,297 — — — 1,205,297 Total Current Assets 142,681,526 (100,971,165 ) (350,386 ) (97 ) 41,359,878 Operating lease right-of-use assets 4,927,810 — — — 4,927,810 Property and equipment, net 3,533,038 — — — 3,533,038 Refundable income taxes — — — 434,903 434,903 Deferred income taxes 486,664 — — (486,664 ) — Other assets 229,552 — — — 229,552 Total Assets $ 151,858,590 $ (100,971,165 ) $ (350,386 ) $ (51,858 ) $ 50,485,181 Liabilities and Shareholders' Equity (Deficit) Current Liabilities: Accounts payable $ 12,364,039 $ — $ — $ — $ 12,364,039 Accrued expenses 1,089,803 — — — 1,089,803 Contract liabilities 3,279,843 (3,190 ) — — 3,276,653 Loss reserve 216,606 2,820,076 — — 3,036,682 Current portion of long-term debt 2,506,099 — — — 2,506,099 Operating lease liabilities 1,593,243 — — — 1,593,243 Income taxes payable 253,798 — — (211,677 ) 42,121 Total Current Liabilities 21,303,431 2,816,886 — (211,677 ) 23,908,640 Line of credit 23,738,685 — — — 23,738,685 Long-term operating lease liabilities 3,837,678 — — — 3,837,678 Long-term debt, net of current portion 3,601,883 — — — 3,601,883 Deferred income taxes 4,028,553 — — (4,028,553 ) — Total Liabilities 56,510,230 2,816,886 — (4,240,230 ) 55,086,886 Shareholders' Equity (Deficit): Common stock 11,736 — — — 11,736 Additional paid-in capital 70,917,811 — — — 70,917,811 Retained earnings (accumulated deficit) 24,418,813 (103,788,051 ) (350,386 ) 4,188,372 (75,531,252 ) Total Shareholders’ Equity (Deficit) 95,348,360 (103,788,051 ) (350,386 ) 4,188,372 (4,601,705 ) Total Liabilities and Shareholders’ $ 151,858,590 $ (100,971,165 ) $ (350,386 ) $ (51,858 ) $ 50,485,181 As of December 31, 2018 As Previously Revenue Other Income As Restated ASSETS Current Assets: Cash $ 4,128,142 $ — $ — $ — $ 4,128,142 Restricted cash 2,000,000 — — — 2,000,000 Accounts receivable, net 8,623,329 — 99,242 — 8,722,571 Contract assets 113,333,491 (95,744,625 ) — — 17,588,866 Inventory 9,711,997 — (350,386 ) — 9,361,611 Refundable income taxes 435,000 — — (97 ) 434,903 Prepaid expenses and other current assets 1,972,630 — — — 1,972,630 Total Current Assets 140,204,589 (95,744,625 ) (251,144 ) (97 ) 44,208,723 Property and equipment, net 2,545,192 — — — 2,545,192 Refundable income taxes 435,000 — — (97 ) 434,903 Deferred income taxes 279,318 — — (279,318 ) — Other assets 249,575 — — — 249,575 Total Assets $ 143,713,674 $ (95,744,625 ) $ (251,144 ) $ (279,512 ) $ 47,438,393 Liabilities and Shareholders' Equity (Deficit) Current Liabilities: Accounts payable $ 9,902,481 $ — $ — $ — $ 9,902,481 Accrued expenses 1,558,160 — — — 1,558,160 Contract liabilities 3,588,500 1,664,079 — — 5,252,579 Loss reserve 216,606 3,446,952 — — 3,663,558 Current portion of long-term debt 2,434,981 — — — 2,434,981 Income taxes payable 115,000 — — (1,008 ) 113,992 Total Current Liabilities 17,815,728 5,111,031 — (1,008 ) 22,925,751 Line of credit 24,038,685 — — — 24,038,685 Long-term debt, net of current portion 3,876,238 — — — 3,876,238 Deferred income taxes 4,028,553 — — (4,028,553 ) — Other liabilities 531,124 — — — 531,124 Total Liabilities 50,290,328 5,111,031 — (4,029,561 ) 51,371,798 Shareholders’ Equity (Deficit): Common stock 11,718 — — — 11,718 Additional paid-in capital 70,651,413 — — — 70,651,413 Retained earnings (accumulated deficit) 22,760,215 (100,855,656 ) (251,144 ) 3,750,049 (74,596,536 ) Total Shareholders’ Equity (Deficit) 93,423,346 (100,855,656 ) (251,144 ) 3,750,049 (3,933,405 ) Total Liabilities and Shareholders' Equity(Deficit) $ 143,713,674 $ (95,744,625 ) $ (251,144 ) $ (279,512 ) $ 47,438,393 Cumulative Effect of Prior Period Adjustments The following table presents the impact of the Restatement on the Company’s shareholders’ equity (deficit) as of January 1, 2018: Common Additional Retained Accumulated Total Balance, January 1, 2018 (As previously reported) $ 8,864 $ 53,770,617 $ 20,548,652 $ (14,800 ) $ 74,313,333 Adjustments: Revenue recognition — — (86,621,280 ) — (86,621,280 ) Other — — (280,143 ) — (280,143 ) Income taxes — — (697,012 ) — (697,012 ) Cumulative restatement adjustments — — (87,598,435 ) — (87,598,435 ) Balance, January 1, 2018 (As Restated) $ 8,864 $ 53,770,617 $ (67,049,783 ) $ (14,800 ) $ (13,285,102 ) Impact on Consolidated Statement of Cash Flows The effect of the Restatement described above on the accompanying consolidated statement of cash flows for the three months ended March 31, 2019 is as follows: Three Months Ended March 31, 2019 As Previously Restatement As Restated Cash flows from operating activities: Net income (loss) $ 1,658,598 $ (2,593,314 ) $ (934,716 ) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 209,261 — 209,261 Amortization of debt issuance cost 20,024 16,929 36,953 Cash expended in excess of rent expense (28,012 ) — (28,012 ) Stock-based compensation 330,787 — 330,787 Deferred income taxes (207,346 ) 207,346 — Changes in operating assets and liabilities: Decrease in accounts receivable 2,040,174 99,243 2,139,417 Increase in contract assets (7,416,427 ) 5,226,539 (2,189,888 ) Increase in inventory (1,378,998 ) — (1,378,998 ) Decrease in refundable income taxes 435,000 (435,000 ) — Decrease in prepaid expenses and other current assets 558,845 (17,054 ) 541,791 Increase in accounts payable and accrued expenses 1,993,200 — 1,993,200 Decrease in contract liabilities (686,782 ) (1,667,144 ) (2,353,926 ) Decrease in loss reserve — (626,876 ) (626,876 ) Increase (decrease) in income taxes payable 138,798 (210,669 ) (71,871 ) Net cash used in operating activities (2,332,878 ) — (2,332,878 ) Cash flows from investing activities: Purchase of property and equipment (210,695 ) — (210,695 ) Net cash used in investing activities (210,695 ) — (210,695 ) Cash flows from financing activities: Payments of long-term debt (603,037 ) — (603,037 ) Payments of line of credit (300,000 ) — (300,000 ) Stock offering costs paid (64,371 ) — (64,371 ) Net cash used in financing activities (967,408 ) — (967,408 ) Net decrease in cash and restricted cash (3,510,981 ) — (3,510,981 ) Cash and restricted cash at beginning of period 6,128,142 — 6,128,142 Cash and restricted cash at end of period $ 2,617,161 $ — $ 2,617,161 Supplemental disclosures of cash flow information: Cash paid during the period for interest $ 551,635 $ — $ 551,635 Cash paid during the period for income taxes $ 90,202 $ — $ 90,202 Supplemental schedule of noncash investing and financing activities: Equipment acquired under financing lease $ 399,800 $ — $ 399,800 Impact on Consolidated Statement of Cash Flows The effect of the Restatement described above on the accompanying consolidated statement of cash flows for the three months ended March 31, 2018 is as follows: Three Months Ended March 31, 2018 As Previously Restatement As Restated Cash flows from operating activities: Net income (loss) $ 1,256,765 $ (2,699,672 ) $ (1,442,907 ) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 153,297 — 153,297 Amortization of debt issuance cost 21,392 — 21,392 Cash expended in excess of rent expense (17,692 ) — (17,692 ) Stock-based compensation 303,940 (93,912 ) 210,028 Bad debt expense — 150,000 150,000 Common stock issued as employee compensation 45,913 — 45,913 Deferred income taxes 405,000 (405,000 ) — Changes in operating assets and liabilities: Decrease in accounts receivable 1,395,407 (150,000 ) 1,245,407 (Increase) decrease in contract assets (2,865,025 ) 3,260,082 395,057 Increase in inventory (49,100 ) — (49,100 ) Decrease in prepaid expenses and other current assets 98,683 — 98,683 Decrease in accounts payable and accrued expenses (3,247,776 ) (141,146 ) (3,388,922 ) Increase in contract liabilities 35,198 (3,091 ) 32,107 Decrease in loss reserve — (27,456 ) (27,456 ) Increase (decrease) in income taxes payable (109,327 ) 110,195 868 Net cash used in operating activities (2,573,325 ) — (2,573,325 ) Cash flows from investing activities: Purchase of property and equipment (156,006 ) — (156,006 ) Net cash used in investing activities (156,006 ) — (156,006 ) Cash flows from financing activities: Payments of long-term debt (418,306 ) — (418,306 ) Proceeds from line of credit 2,000,000 — 2,000,000 Net cash used in financing activities 1,581,694 — 1,581,694 Net decrease in cash and restricted cash (1,147,637 ) — (1,147,637 ) Cash and restricted cash at beginning of period 1,430,877 — 1,430,877 Cash and restricted cash at end of period $ 283,240 $ — $ 283,240 Supplemental disclosures of cash flow information: Cash paid during the period for interest $ 429,614 $ — $ 429,614 |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Business Combinations [Abstract] | |
Schedule of provisional estimates of the fair value of the assets acquired and liabilities assumed from WMI | As stated above, as of March 31, 2019, the Company determined the following provisional estimates of the fair value of the assets acquired and liabilities assumed from WMI: Provisional Fair Values Other current assets $ 1,049,000 Accounts receivable 1,522,000 Inventory 7,969,000 Property and equipment, net 586,000 Current liabilities (5,174,000 ) Total $ 5,952,000 |
Schedule of pro forma revenue and net income for acquisition | The following table presents the unaudited pro forma revenue and net income for the period presented as if the WMI Acquisition had occurred on January 1, 2018, based on the provisional estimates of the fair value of the net assets acquired: March 31, 2018 Revenue $ 17,532,728 Net Loss $ (1,859,365 ) |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of revenue by contract type | The following tables present the Company’s revenue disaggregated by contract type: Three months ended March 31, 2019 2018 Aerostructures $ 10,080,873 $ 8,842,220 Aerosystems 8,123,468 2,718,088 Kitting and Supply Chain Management 3,784,043 3,429,643 $ 21,988,384 $ 14,989,951 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Schedule of aggreagte minimum lease payments under non-cancellable operating leases | Future minimum lease payments under non-cancellable operating leases as of March 31, 2019 were as follows: Twelve months ending March 31, 2020 $ 1,875,995 2021 1,918,838 2022 1,951,687 2023 222,922 2024 6,028 Total undiscounted operating lease payments 5,975,470 Less imputed interest 544,549 Present value of operating lease payments $ 5,430,921 |
Schedule of ROU assets and operating lease liabilities | The following table sets forth the ROU assets and operating lease liabilities as of March 31, 2019: Assets ROU Assets $ 4,927,810 Liabilities Current operating lease liabilities $ 1,593,243 Long-term operating lease liabilities 3,837,678 Total ROU liabilities $ 5,430,921 |
RECONCILIATION OF CASH AND RE_2
RECONCILIATION OF CASH AND RESTRICTED CASH (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Cash and Cash Equivalents [Abstract] | |
Reconciliation of cash and restricted cash reported | The following table provides a reconciliation of cash and restricted cash reported within the consolidated statement of cash flows that sum to the total of the same such amounts shown in the statement of cash flows: March 31, 2019 March 31, 2018 Cash $ 617,161 $ 283,240 Restricted cash 2,000,000 — Total cash and restricted cash shown in the consolidated statement of cash flow $ 2,617,161 $ 283,240 |
INVENTORY (Tables)
INVENTORY (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of components of inventory | The components of inventory consisted of the following: March 31, 2019 December 31, 2018 Raw materials $ 2,867,039 $ 2,591,872 Work in progress 5,590,480 4,015,028 Finished goods 2,283,090 2,754,711 Total $ 10,740,609 $ 9,361,611 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of stock options plans activity | A summary of the status of the Company’s stock option plans as of March 31, 2019 and changes during the three months ended March 31, 2019 is as follows: Options Weighted Weighted Aggregate Outstanding at beginning of period 41,772 $ 7.58 — — Exercised during the period 35,000 $ 6.60 — — Outstanding and exercisable at end of period 6,772 $ 12.67 0.25 $ — |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair values | March 31, 2019 (restated) Carrying Amount Fair Value Debt Line of credit and long-term debt $ 29,846,667 $ 29,846,667 December 31, 2018 (restated) Carrying Amount Fair Value Debt Line of credit and long-term debt $ 30,349,904 $ 30,349,904 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of maturities of long-term debt | The maturities of long-term debt (excluding unamortized debt issuance costs) are as follows: Twelve months ending March 31, 2020 $ 2,506,099 2021 3,131,789 2022 204,065 2023 179,055 Thereafter 86,974 Total $ 6,107,982 |
RESTATEMENT OF PREVIOUSLY ISS_2
RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Schedule of Impact on Financial Statements | The effect of the Restatement described above on the accompanying consolidated statements of operations for the three months ended March 31, 2019 and 2018 is as follows: Three Months Ended March 31, 2018 As Previously Revenue Income As Reported Recognition Other Taxes Restated Revenue $ 18,191,623 $ (3,201,672 ) $ — $ — $ 14,989,951 Cost of sales 14,141,755 27,862 (280,143 ) — 13,889,474 Gross profit 4,049,868 (3,229,534 ) 280,143 — 1,100,477 Selling, general and administrative expenses 2,049,840 — 45,086 — 2,094,926 Income (loss) from operations 2,000,028 (3,229,534 ) 235,057 — (994,449 ) Interest expense 447,263 — — — 447,263 Income (loss) before provision for (benefit from) income taxes 1,552,765 (3,229,534 ) 235,057 — (1,441,712 ) Provision for (benefit from) income taxes 296,000 — — (294,805 ) 1,195 Net income (loss) 1,256,765 (3,229,534 ) 235,057 294,805 (1,442,907 ) Other comprehensive loss net of tax–Change in unrealized loss interest rate swap on int on interest rate swap (5,800 ) — — — (5,800 ) Comprehensive income (loss) $ 1,250,965 $ (3,229,534 ) $ 235,057 $ 294,805 $ (1,448,707 ) Income (loss) per common share – basic $ 0.14 $ (0.16 ) Income (loss) per common share – diluted $ 0.14 $ (0.16 ) Shares used in computing earnings (loss) per common share: Basic 8,888,179 8,888,179 Diluted 8,940,385 8,888,179 Three Months Ended March 31, 2019 As Previously Revenue Other Income As Restated Revenue $ 25,583,531 $ (3,595,147 ) $ — $ — $ 21,988,384 Cost of sales 20,167,721 (662,753 ) — — 19,504,968 Gross profit 5,415,810 (2,932,394 ) — — 2,483,416 Selling, general and administrative expenses 2,806,443 — 99,243 — 2,905,686 Income (loss) from operations 2,609,367 (2,932,394 ) (99,243 ) — (422,270 ) Interest expense 510,769 — — — 510,769 Income (loss) before provision for (benefit from) income taxes 2,098,598 (2,932,394 ) (99,243 ) — (933,039 ) Provision for (benefit from) income taxes 440,000 — — (438,323 ) 1,677 Net income (loss) $ 1,658,598 $ (2,932,394 ) $ (99,243 ) $ 438,323 $ (934,716 ) Income per common share – basic $ 0.14 $ (0.08 ) Income per common share – diluted $ 0.14 $ (0.08 ) Shares used in computing earnings per common share: Basic 11,736,305 11,736,305 Diluted 11,792,818 11,736,305 The effect of the Restatement described above on the accompanying consolidated balance sheets as of March 31, 2019 and December 31, 2018 is as follows: As of March 31, 2019 As Previously Reported Revenue Other Income As Restated ASSETS Current Assets: Cash $ 617,161 $ — $ — $ — $ 617,161 Restricted cash 2,000,000 — — — 2,000,000 Accounts receivable, net 6,583,155 — — — 6,583,155 Contract assets 120,749,918 (100,971,165 ) — — 19,778,753 Inventory 11,090,995 — (350,386 ) — 10,740,609 Refundable income taxes 435,000 — — (97 ) 434,903 Prepaid expenses and other current assets 1,205,297 — — — 1,205,297 Total Current Assets 142,681,526 (100,971,165 ) (350,386 ) (97 ) 41,359,878 Operating lease right-of-use assets 4,927,810 — — — 4,927,810 Property and equipment, net 3,533,038 — — — 3,533,038 Refundable income taxes — — — 434,903 434,903 Deferred income taxes 486,664 — — (486,664 ) — Other assets 229,552 — — — 229,552 Total Assets $ 151,858,590 $ (100,971,165 ) $ (350,386 ) $ (51,858 ) $ 50,485,181 Liabilities and Shareholders' Equity (Deficit) Current Liabilities: Accounts payable $ 12,364,039 $ — $ — $ — $ 12,364,039 Accrued expenses 1,089,803 — — — 1,089,803 Contract liabilities 3,279,843 (3,190 ) — — 3,276,653 Loss reserve 216,606 2,820,076 — — 3,036,682 Current portion of long-term debt 2,506,099 — — — 2,506,099 Operating lease liabilities 1,593,243 — — — 1,593,243 Income taxes payable 253,798 — — (211,677 ) 42,121 Total Current Liabilities 21,303,431 2,816,886 — (211,677 ) 23,908,640 Line of credit 23,738,685 — — — 23,738,685 Long-term operating lease liabilities 3,837,678 — — — 3,837,678 Long-term debt, net of current portion 3,601,883 — — — 3,601,883 Deferred income taxes 4,028,553 — — (4,028,553 ) — Total Liabilities 56,510,230 2,816,886 — (4,240,230 ) 55,086,886 Shareholders' Equity (Deficit): Common stock 11,736 — — — 11,736 Additional paid-in capital 70,917,811 — — — 70,917,811 Retained earnings (accumulated deficit) 24,418,813 (103,788,051 ) (350,386 ) 4,188,372 (75,531,252 ) Total Shareholders’ Equity (Deficit) 95,348,360 (103,788,051 ) (350,386 ) 4,188,372 (4,601,705 ) Total Liabilities and Shareholders’ $ 151,858,590 $ (100,971,165 ) $ (350,386 ) $ (51,858 ) $ 50,485,181 As of December 31, 2018 As Previously Revenue Other Income As Restated ASSETS Current Assets: Cash $ 4,128,142 $ — $ — $ — $ 4,128,142 Restricted cash 2,000,000 — — — 2,000,000 Accounts receivable, net 8,623,329 — 99,242 — 8,722,571 Contract assets 113,333,491 (95,744,625 ) — — 17,588,866 Inventory 9,711,997 — (350,386 ) — 9,361,611 Refundable income taxes 435,000 — — (97 ) 434,903 Prepaid expenses and other current assets 1,972,630 — — — 1,972,630 Total Current Assets 140,204,589 (95,744,625 ) (251,144 ) (97 ) 44,208,723 Property and equipment, net 2,545,192 — — — 2,545,192 Refundable income taxes 435,000 — — (97 ) 434,903 Deferred income taxes 279,318 — — (279,318 ) — Other assets 249,575 — — — 249,575 Total Assets $ 143,713,674 $ (95,744,625 ) $ (251,144 ) $ (279,512 ) $ 47,438,393 Liabilities and Shareholders' Equity (Deficit) Current Liabilities: Accounts payable $ 9,902,481 $ — $ — $ — $ 9,902,481 Accrued expenses 1,558,160 — — — 1,558,160 Contract liabilities 3,588,500 1,664,079 — — 5,252,579 Loss reserve 216,606 3,446,952 — — 3,663,558 Current portion of long-term debt 2,434,981 — — — 2,434,981 Income taxes payable 115,000 — — (1,008 ) 113,992 Total Current Liabilities 17,815,728 5,111,031 — (1,008 ) 22,925,751 Line of credit 24,038,685 — — — 24,038,685 Long-term debt, net of current portion 3,876,238 — — — 3,876,238 Deferred income taxes 4,028,553 — — (4,028,553 ) — Other liabilities 531,124 — — — 531,124 Total Liabilities 50,290,328 5,111,031 — (4,029,561 ) 51,371,798 Shareholders’ Equity (Deficit): Common stock 11,718 — — — 11,718 Additional paid-in capital 70,651,413 — — — 70,651,413 Retained earnings (accumulated deficit) 22,760,215 (100,855,656 ) (251,144 ) 3,750,049 (74,596,536 ) Total Shareholders’ Equity (Deficit) 93,423,346 (100,855,656 ) (251,144 ) 3,750,049 (3,933,405 ) Total Liabilities and Shareholders' Equity(Deficit) $ 143,713,674 $ (95,744,625 ) $ (251,144 ) $ (279,512 ) $ 47,438,393 The following table presents the impact of the Restatement on the Company’s shareholders’ equity (deficit) as of January 1, 2018: Common Additional Retained Accumulated Total Balance, January 1, 2018 (As previously reported) $ 8,864 $ 53,770,617 $ 20,548,652 $ (14,800 ) $ 74,313,333 Adjustments: Revenue recognition — — (86,621,280 ) — (86,621,280 ) Other — — (280,143 ) — (280,143 ) Income taxes — — (697,012 ) — (697,012 ) Cumulative restatement adjustments — — (87,598,435 ) — (87,598,435 ) Balance, January 1, 2018 (As Restated) $ 8,864 $ 53,770,617 $ (67,049,783 ) $ (14,800 ) $ (13,285,102 ) The effect of the Restatement described above on the accompanying consolidated statement of cash flows for the three months ended March 31, 2019 is as follows: Three Months Ended March 31, 2019 As Previously Restatement As Restated Cash flows from operating activities: Net income (loss) $ 1,658,598 $ (2,593,314 ) $ (934,716 ) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 209,261 — 209,261 Amortization of debt issuance cost 20,024 16,929 36,953 Cash expended in excess of rent expense (28,012 ) — (28,012 ) Stock-based compensation 330,787 — 330,787 Deferred income taxes (207,346 ) 207,346 — Changes in operating assets and liabilities: Decrease in accounts receivable 2,040,174 99,243 2,139,417 Increase in contract assets (7,416,427 ) 5,226,539 (2,189,888 ) Increase in inventory (1,378,998 ) — (1,378,998 ) Decrease in refundable income taxes 435,000 (435,000 ) — Decrease in prepaid expenses and other current assets 558,845 (17,054 ) 541,791 Increase in accounts payable and accrued expenses 1,993,200 — 1,993,200 Decrease in contract liabilities (686,782 ) (1,667,144 ) (2,353,926 ) Decrease in loss reserve — (626,876 ) (626,876 ) Increase (decrease) in income taxes payable 138,798 (210,669 ) (71,871 ) Net cash used in operating activities (2,332,878 ) — (2,332,878 ) Cash flows from investing activities: Purchase of property and equipment (210,695 ) — (210,695 ) Net cash used in investing activities (210,695 ) — (210,695 ) Cash flows from financing activities: Payments of long-term debt (603,037 ) — (603,037 ) Payments of line of credit (300,000 ) — (300,000 ) Stock offering costs paid (64,371 ) — (64,371 ) Net cash used in financing activities (967,408 ) — (967,408 ) Net decrease in cash and restricted cash (3,510,981 ) — (3,510,981 ) Cash and restricted cash at beginning of period 6,128,142 — 6,128,142 Cash and restricted cash at end of period $ 2,617,161 $ — $ 2,617,161 Supplemental disclosures of cash flow information: Cash paid during the period for interest $ 551,635 $ — $ 551,635 Cash paid during the period for income taxes $ 90,202 $ — $ 90,202 Supplemental schedule of noncash investing and financing activities: Equipment acquired under financing lease $ 399,800 $ — $ 399,800 The effect of the Restatement described above on the accompanying consolidated statement of cash flows for the three months ended March 31, 2018 is as follows: Three Months Ended March 31, 2018 As Previously Restatement As Restated Cash flows from operating activities: Net income (loss) $ 1,256,765 $ (2,699,672 ) $ (1,442,907 ) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 153,297 — 153,297 Amortization of debt issuance cost 21,392 — 21,392 Cash expended in excess of rent expense (17,692 ) — (17,692 ) Stock-based compensation 303,940 (93,912 ) 210,028 Bad debt expense — 150,000 150,000 Common stock issued as employee compensation 45,913 — 45,913 Deferred income taxes 405,000 (405,000 ) — Changes in operating assets and liabilities: Decrease in accounts receivable 1,395,407 (150,000 ) 1,245,407 (Increase) decrease in contract assets (2,865,025 ) 3,260,082 395,057 Increase in inventory (49,100 ) — (49,100 ) Decrease in prepaid expenses and other current assets 98,683 — 98,683 Decrease in accounts payable and accrued expenses (3,247,776 ) (141,146 ) (3,388,922 ) Increase in contract liabilities 35,198 (3,091 ) 32,107 Decrease in loss reserve — (27,456 ) (27,456 ) Increase (decrease) in income taxes payable (109,327 ) 110,195 868 Net cash used in operating activities (2,573,325 ) — (2,573,325 ) Cash flows from investing activities: Purchase of property and equipment (156,006 ) — (156,006 ) Net cash used in investing activities (156,006 ) — (156,006 ) Cash flows from financing activities: Payments of long-term debt (418,306 ) — (418,306 ) Proceeds from line of credit 2,000,000 — 2,000,000 Net cash used in financing activities 1,581,694 — 1,581,694 Net decrease in cash and restricted cash (1,147,637 ) — (1,147,637 ) Cash and restricted cash at beginning of period 1,430,877 — 1,430,877 Cash and restricted cash at end of period $ 283,240 $ — $ 283,240 Supplemental disclosures of cash flow information: Cash paid during the period for interest $ 429,614 $ — $ 429,614 |
INTERIM FINANCIAL STATEMENTS (D
INTERIM FINANCIAL STATEMENTS (Details Narrative) - USD ($) | Mar. 31, 2019 | Jan. 02, 2019 |
Cash uninsured amount | $ 511,170 | |
Operating lease right-of-use assets | 4,927,810 | |
Operating lease right-of-use liabilities | $ 3,837,678 | |
ASU 2016-02 [Member] | ||
Operating lease right-of-use assets | $ 5,300,000 | |
Operating lease right-of-use liabilities | $ 5,900,000 | |
Operating lease incremental borrowing rate | 6.00% |
BUSINESS COMBINATIONS (Details)
BUSINESS COMBINATIONS (Details) - WMI [Member] | Mar. 31, 2019USD ($) |
Allocation of the total purchase price of business combination: | |
Other current assets | $ 1,049,000 |
Accounts receivable | 1,522,000 |
Inventory | 7,969,000 |
Property and equipment, net | 586,000 |
Current liabilities | (5,174,000) |
Total | $ 5,952,000 |
BUSINESS COMBINATIONS (Details
BUSINESS COMBINATIONS (Details 1) - WMI [Member] | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Pro forma Information: | |
Revenue | $ 17,532,728 |
Net Loss | $ (1,859,365) |
BUSINESS COMBINATIONS (Detail_2
BUSINESS COMBINATIONS (Details Narrative) - WMI [Member] - USD ($) | Dec. 20, 2018 | Jun. 30, 2019 | Mar. 31, 2019 |
Allocation of total purchase price | $ 7,900,000 | ||
Purchase price held in escrow | $ 2,000,000 | $ 2,000,000 |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue by long-term contract type | $ 21,988,384 | $ 14,989,951 |
Aerostructures [Member] | ||
Revenue by long-term contract type | 10,284,503 | 8,842,220 |
Aerosystems [Member] | ||
Revenue by long-term contract type | 8,123,468 | 2,718,088 |
Kitting and Supply Chain Management [Member] | ||
Revenue by long-term contract type | $ 3,580,413 | $ 3,429,643 |
REVENUE RECOGNITION (Details Na
REVENUE RECOGNITION (Details Narrative) | Mar. 31, 2019USD ($) |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligations | $ 113,500,000 |
Performance obligation recognition percentage | 63.00% |
Performance obligation recognition year | 2019 |
LEASES (Details)
LEASES (Details) | Mar. 31, 2019USD ($) |
Twelve months ending March 31, | |
2020 | $ 1,875,995 |
2021 | 1,918,838 |
2022 | 1,951,687 |
2023 | 222,922 |
2024 | 6,028 |
Total undiscounted operating lease payments | 5,975,470 |
Less imputed interest | 544,549 |
Present value of operating lease payments | $ 5,430,921 |
LEASES (Details 1)
LEASES (Details 1) | Mar. 31, 2019USD ($) |
Assets | |
ROU Assets | $ 4,927,810 |
Liabilities | |
Current operating lease liabilities | 1,593,243 |
Long-term operating lease liabilities | 3,837,678 |
Total ROU liabilities | $ 5,430,921 |
LEASES (Details Narrative)
LEASES (Details Narrative) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Leases [Abstract] | |
Rent expense, net | $ 438,328 |
Weighted average remaining lease term operating leases | 3 years 4 months 24 days |
RECONCILIATION OF CASH AND RE_3
RECONCILIATION OF CASH AND RESTRICTED CASH (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Cash and Cash Equivalents [Abstract] | ||||
Cash | $ 617,161 | $ 4,128,142 | $ 283,240 | |
Restricted cash | 2,000,000 | 2,000,000 | ||
Total cash and restricted cash shown in the consolidated statement of cash flow | $ 2,617,161 | $ 6,128,142 | $ 283,240 | $ 1,430,877 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw Materials | $ 2,867,039 | $ 2,591,872 |
Work In Progress | 5,590,480 | 4,015,028 |
Finished Goods | 2,283,090 | 2,754,711 |
Inventory | $ 10,740,609 | $ 9,361,611 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - Stock Option Plans [Member] | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Options, Outstanding | |
Outstanding at beginning | shares | 41,772 |
Exercised | shares | 35,000 |
Outstanding and Exercisable at end | shares | 6,772 |
Options, Outstanding, Weighted Average Exercise Price | |
Outstanding at beginning | $ / shares | $ 7.58 |
Exercised | $ / shares | 6.60 |
Outstanding and Exercisable at end | $ / shares | $ 12.67 |
Options, Weighted Average Remaining Contractual Term | |
Outstanding and Exercisable at end | 3 months |
STOCK-BASED COMPENSATION (Det_2
STOCK-BASED COMPENSATION (Details Narrative) - USD ($) | Feb. 12, 2019 | Mar. 22, 2018 | Jan. 31, 2019 | Mar. 31, 2018 | Jan. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 |
Restricted Stock Units (RSUs) [Member] | Director [Member] | |||||||
Stock-based compensation | $ 250,000 | $ 273,000 | |||||
Restricted stock units granted | 75,350 | 58,578 | |||||
Vesting period | 1 year | 1 year | |||||
Stock Awards [Member] | Granted In 2016 [Member] | |||||||
Stock awards forfeited (shares) | 12,330 | ||||||
Stock Awards [Member] | Granted In 2017 [Member] | |||||||
Stock awards forfeited (shares) | 9,130 | ||||||
Stock Awards [Member] | Employees [Member] | |||||||
Number of common shares granted | 68,764 | 5,130 | 5,550 | ||||
Number of shares returned for employee's withholding taxes (shares) | 1,221 | 7,552 | |||||
Value of shares returned for employee's withholding taxes | $ 7,893 | $ 62,000 | |||||
Stock Awards [Member] | Employees [Member] | Selling, General and Administrative Expenses [Member] | |||||||
Stock-based compensation | $ 10,000 | ||||||
Stock Awards [Member] | Employees [Member] | Cost of Sales [Member] | |||||||
Stock-based compensation | 36,000 | ||||||
Stock Awards [Member] | Employees [Member] | Selling, General and Administrative Expenses [Member] | |||||||
Stock-based compensation | 85,000 | $ 76,600 | |||||
Stock Awards [Member] | Employees [Member] | Cost of Sales [Member] | |||||||
Stock-based compensation | $ 16,100 | $ 16,100 | |||||
Stock Option Plans [Member] | |||||||
Number of options exercised | 35,000 | ||||||
Fair value of shares on exercise date | $ 231,003 | ||||||
Shares received in exercise of options for exchange (shares) | 34,478 |
FAIR VALUE (Details)
FAIR VALUE (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Carrying Amount [Member] | ||
Line of credit and long-term debt | $ 29,846,667 | $ 30,349,904 |
Fair Value [Member] | ||
Line of credit and long-term debt | $ 29,846,667 | $ 30,349,904 |
CONTRACT ASSETS AND CONTRACT _2
CONTRACT ASSETS AND CONTRACT LIABILITIES (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Contract Assets And Contract Liabilities | ||
Revenue recognized from contract liabilities | $ 5,200,000 | $ 8,000 |
LOSS PER COMMON SHARE (Details
LOSS PER COMMON SHARE (Details Narrative) - shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Stock Compensation [Member] | ||
Antidilutive securities excluded from computation of earnings per share (shares) | 56,513 | 78,933 |
Stock Option Plans [Member] | ||
Antidilutive securities excluded from computation of earnings per share (shares) | 6,772 | 45,249 |
DEBT (Details)
DEBT (Details) | Mar. 31, 2019USD ($) |
Twelve months ending March 31, | |
2020 | $ 2,506,099 |
2021 | 3,131,789 |
2022 | 204,065 |
2023 | 179,055 |
Thereafter | 86,974 |
Total | $ 6,107,982 |
DEBT (Details Narrative)
DEBT (Details Narrative) - USD ($) | Aug. 24, 2020 | Mar. 31, 2019 | Mar. 24, 2016 | Dec. 31, 2018 |
Financing leases and notes payable | $ 1,236,697 | |||
Financing leases and notes payable, current | $ 406,099 | |||
Revolving Credit Facility [Member] | Bank United [Member] | ||||
Line of credit facility, maximum borrowing capacity | $ 30,000,000 | |||
Line of credit facility, maturity date | Jun. 30, 2020 | |||
Oustanding loans | $ 23,700,000 | |||
Line of credit facility, interest rate at period end | 6.25% | |||
Revolving Credit Facility [Member] | Sixth Amendment - Bank United [Member] | Subsequent Event [Member] | ||||
Line of credit facility, maximum borrowing capacity | $ 24,000,000 | |||
Line of credit facility, maturity date | May 22, 2022 | |||
Reduction in revolving note | $ 6,000,000 | |||
Term loan [Member] | Bank United [Member] | ||||
Debt instrument, face amount | 10,000,000 | |||
Line of credit facility, maturity date | Jun. 30, 2020 | |||
Payments of debt issuance costs | $ 463,000 | |||
Debt issuance costs | $ 121,000 | |||
Debt issuance costs, reduction of long-term debt | $ 37,000 | |||
Term loan [Member] | Sixth Amendment - Bank United [Member] | Subsequent Event [Member] | ||||
Line of credit facility, maturity date | May 22, 2022 | |||
Revolving note converted into term loan | $ 6,000,000 |
MAJOR CUSTOMERS (Details Narrat
MAJOR CUSTOMERS (Details Narrative) - Number | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 |
Revenue [Member] | ||||
Concentration Risk [Line Items] | ||||
Number of large commercial customers | 4 | 4 | ||
Revenue [Member] | Customer Concentration Risk [Member] | Customer One [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 27.00% | 26.00% | ||
Revenue [Member] | Customer Concentration Risk [Member] | Customer Two [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 14.00% | 14.00% | ||
Revenue [Member] | Customer Concentration Risk [Member] | Customer Three [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 13.00% | 14.00% | ||
Revenue [Member] | Customer Concentration Risk [Member] | Customer Four [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 11.00% | 11.00% | ||
Contract Assets [Member] | ||||
Concentration Risk [Line Items] | ||||
Number of large commercial customers | 5 | 3 | ||
Contract Assets [Member] | Customer Concentration Risk [Member] | Customer One [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 34.00% | 53.00% | ||
Contract Assets [Member] | Customer Concentration Risk [Member] | Customer Two [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 14.00% | 21.00% | ||
Contract Assets [Member] | Customer Concentration Risk [Member] | Customer Three [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 12.00% | 10.00% | ||
Contract Assets [Member] | Customer Concentration Risk [Member] | Customer Four [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 12.00% | |||
Contract Assets [Member] | Customer Concentration Risk [Member] | Customer Five [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 10.00% | |||
Accounts Receivable [Member] | ||||
Concentration Risk [Line Items] | ||||
Number of large commercial customers | 4 | 4 | ||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer One [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 24.00% | 18.00% | ||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer Two [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 16.00% | 16.00% | ||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer Three [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 15.00% | 14.00% | ||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer Four [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 10.00% | 14.00% |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) | Aug. 24, 2020USD ($) | Sep. 27, 2019USD ($) | Sep. 03, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 20, 2018USD ($) | May 31, 2020USD ($) | Oct. 31, 2019USD ($) | Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) | Apr. 10, 2020USD ($) | Dec. 31, 2019USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($) | Mar. 24, 2016USD ($) |
Restricted cash | $ 2,000,000 | $ 2,000,000 | $ 2,000,000 | |||||||||||
Net income | (934,716) | $ (1,442,907) | ||||||||||||
Term loan [Member] | Bank United [Member] | ||||||||||||||
Principal amount | $ 10,000,000 | |||||||||||||
Line of credit facility, maturity date | Jun. 30, 2020 | |||||||||||||
Revolving Credit Facility [Member] | Amendment - Bank United [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||||||||||||
Variable rate spread | 3.25% | |||||||||||||
Revolving Credit Facility [Member] | Amendment - Bank United [Member] | Prime Rate [Member] | ||||||||||||||
Variable rate spread | 0.25% | |||||||||||||
Revolving Credit Facility [Member] | Amendment - Bank United [Member] | Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||||||||||||
Variable rate spread | 0.50% | |||||||||||||
Revolving Credit Facility [Member] | Bank United [Member] | ||||||||||||||
Line of credit facility, maximum borrowing capacity | $ 30,000,000 | |||||||||||||
Line of credit facility, maturity date | Jun. 30, 2020 | |||||||||||||
Air [Member] | ||||||||||||||
Judgment amount sought | $ 4,100,000 | |||||||||||||
WMI [Member] | ||||||||||||||
Allocation of total purchase price | $ 7,900,000 | |||||||||||||
Purchase price held in escrow | $ 2,000,000 | $ 2,000,000 | $ 2,000,000 | |||||||||||
Potential decrease in acquisition purchase price | $ 4,100,000 | |||||||||||||
Subsequent Event [Member] | ||||||||||||||
Amount of stop-work order | $ 3,600,000 | |||||||||||||
Judgment amount sought | $ 3,600,000 | |||||||||||||
Subsequent Event [Member] | Sixth Amendment - Bank United [Member] | ||||||||||||||
Minimum adjusted EBITDA | $ 1,000,000 | |||||||||||||
Subsequent Event [Member] | Sixth Amendment - Bank United [Member] | Minimum [Member] | ||||||||||||||
Minimum funded debt to EBITDA ratio | 4 | |||||||||||||
Minimum adjusted EBITDA | $ 2,000,000 | |||||||||||||
Net income | 1 | |||||||||||||
Subsequent Event [Member] | Amendment - Bank United after 9/30/20 [Member] | Minimum [Member] | ||||||||||||||
Minimum adjusted EBITDA | $ 1,000,000 | |||||||||||||
Subsequent Event [Member] | Term loan [Member] | Sixth Amendment - Bank United [Member] | ||||||||||||||
Line of credit facility, maturity date | May 22, 2022 | |||||||||||||
Outstanding principal amount | $ 7,933,000 | |||||||||||||
Revolving note converted into term loan | 6,000,000 | |||||||||||||
Subsequent Event [Member] | Revolving Credit Facility [Member] | Sixth Amendment - Bank United [Member] | ||||||||||||||
Line of credit facility, maximum borrowing capacity | $ 24,000,000 | |||||||||||||
Line of credit facility, maturity date | May 22, 2022 | |||||||||||||
Reduction in revolving note | $ 6,000,000 | |||||||||||||
Subsequent Event [Member] | Air [Member] | ||||||||||||||
Judgment amount sought | $ 4,100,000 | |||||||||||||
Subsequent Event [Member] | WMI [Member] | ||||||||||||||
Potential decrease in acquisition purchase price | $ 4,100,000 | |||||||||||||
Release of escrow deposit | $ 619,000 | |||||||||||||
Restricted cash | $ 1,381,000 | |||||||||||||
Purchase price additional disputed amount | $ 2,100,000 | |||||||||||||
Subsequent Event [Member] | PPP Loan [Member] | ||||||||||||||
Principal amount | $ 4,795,000 | |||||||||||||
Interest rate | 1.00% |
RESTATEMENT OF PREVIOUSLY ISS_3
RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue | $ 21,988,384 | $ 14,989,951 |
Cost of sales | 19,504,968 | 13,889,474 |
Gross profit | 2,483,416 | 1,100,477 |
Selling, general and administrative expenses | 2,905,686 | 2,094,926 |
Income (loss) from operations | (422,270) | (994,449) |
Interest expense | 510,769 | 447,263 |
Income (loss) before provision for (benefit from) income taxes | (933,039) | (1,441,712) |
Provision for (benefit from) income taxes | 1,677 | 1,195 |
Net income (loss) | (934,716) | (1,442,907) |
Other comprehensive loss net of tax–Change in unrealized loss on interest rate swap | (5,800) | |
Comprehensive income (loss) | $ (934,716) | $ (1,448,707) |
Income (loss) per common share - basic (in dollars per share) | $ (0.08) | $ (0.16) |
Income (loss) per common share - diluted (in dollars per share) | $ (0.08) | $ (0.16) |
Shares used in computing earnings (loss) per common share: | ||
Basic (in shares) | 11,736,305 | 8,888,179 |
Diluted (in shares) | 11,736,305 | 8,888,179 |
As Previously Reported [Member] | ||
Revenue | $ 25,583,531 | $ 18,191,623 |
Cost of sales | 20,167,721 | 14,141,755 |
Gross profit | 5,415,810 | 4,049,868 |
Selling, general and administrative expenses | 2,806,443 | 2,049,840 |
Income (loss) from operations | 2,609,367 | 2,000,028 |
Interest expense | 510,769 | 447,263 |
Income (loss) before provision for (benefit from) income taxes | 2,098,598 | 1,552,765 |
Provision for (benefit from) income taxes | 440,000 | 296,000 |
Net income (loss) | $ 1,658,598 | 1,256,765 |
Other comprehensive loss net of tax–Change in unrealized loss on interest rate swap | (5,800) | |
Comprehensive income (loss) | $ 1,250,965 | |
Income (loss) per common share - basic (in dollars per share) | $ 0.14 | $ 0.14 |
Income (loss) per common share - diluted (in dollars per share) | $ 0.14 | $ 0.14 |
Shares used in computing earnings (loss) per common share: | ||
Basic (in shares) | 11,736,305 | 8,888,179 |
Diluted (in shares) | 11,792,818 | 8,940,385 |
Restatement Adjustments [Member] | ||
Net income (loss) | $ (2,593,314) | $ (2,699,672) |
Restatement Adjustments [Member] | Revenue Recognition [Member] | ||
Revenue | (3,595,147) | (3,201,672) |
Cost of sales | (662,753) | 27,862 |
Gross profit | (2,932,394) | (3,229,534) |
Income (loss) from operations | (2,932,394) | (3,229,534) |
Income (loss) before provision for (benefit from) income taxes | (2,932,394) | (3,229,534) |
Net income (loss) | (2,932,394) | (3,229,534) |
Comprehensive income (loss) | (3,229,534) | |
Restatement Adjustments [Member] | Other [Member] | ||
Cost of sales | (280,143) | |
Gross profit | 280,143 | |
Selling, general and administrative expenses | 99,243 | 45,086 |
Income (loss) from operations | (99,243) | 235,057 |
Income (loss) before provision for (benefit from) income taxes | (99,243) | 235,057 |
Net income (loss) | (99,243) | 235,057 |
Comprehensive income (loss) | 235,057 | |
Restatement Adjustments [Member] | Income Taxes [Member] | ||
Provision for (benefit from) income taxes | (438,323) | (294,805) |
Net income (loss) | $ 438,323 | 294,805 |
Comprehensive income (loss) | $ 294,805 |
RESTATEMENT OF PREVIOUSLY ISS_4
RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS (Details 1) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Current Assets: | ||||
Cash | $ 617,161 | $ 4,128,142 | $ 283,240 | |
Restricted cash | 2,000,000 | 2,000,000 | ||
Accounts receivable, net | 6,583,155 | 8,722,571 | ||
Contract assets | 19,778,753 | 17,588,866 | ||
Inventory | 10,740,609 | 9,361,611 | ||
Refundable income taxes | 434,903 | 434,903 | ||
Prepaid expenses and other current assets | 1,205,297 | 1,972,630 | ||
Total Current Assets | 41,359,878 | 44,208,723 | ||
Operating lease right-of-use assets | 4,927,810 | |||
Property and equipment, net | 3,533,038 | 2,545,192 | ||
Refundable income taxes | 434,903 | 434,903 | ||
Other assets | 229,552 | 249,575 | ||
Total Assets | 50,485,181 | 47,438,393 | ||
Current Liabilities: | ||||
Accounts payable | 12,364,039 | 9,902,481 | ||
Accrued expenses | 1,089,803 | 1,558,160 | ||
Contract liabilities | 3,276,653 | 5,252,579 | ||
Loss reserve | 3,036,682 | 3,663,558 | ||
Current portion of long-term debt | 2,506,099 | 2,434,981 | ||
Operating lease liabilities | 1,593,243 | |||
Income taxes payable | 42,121 | 113,992 | ||
Total current liabilities | 23,908,640 | 22,925,751 | ||
Line of credit | 23,738,685 | 24,038,685 | ||
Long-term operating lease liabilities | 3,837,678 | |||
Long-term debt, net of current portion | 3,601,883 | 3,876,238 | ||
Other liabilities | 531,124 | |||
Total Liabilities | 55,086,886 | 51,371,798 | ||
Shareholders' Equity (Deficit): | ||||
Common stock | 11,736 | 11,718 | ||
Additional paid-in capital | 70,917,811 | 70,651,413 | ||
Retained earnings (accumulated deficit) | (75,531,252) | (74,596,536) | ||
Total Shareholders' Equity (Deficit) | (4,601,705) | (3,933,405) | $ (14,477,870) | $ (13,285,102) |
Total Liabilities and Shareholders' Equity (Deficit) | 50,485,181 | 47,438,393 | ||
As Previously Reported [Member] | ||||
Current Assets: | ||||
Cash | 617,161 | 4,128,142 | ||
Restricted cash | 2,000,000 | 2,000,000 | ||
Accounts receivable, net | 6,583,155 | 8,623,329 | ||
Contract assets | 120,749,918 | 113,333,491 | ||
Inventory | 11,090,995 | 9,711,997 | ||
Refundable income taxes | 435,000 | 435,000 | ||
Prepaid expenses and other current assets | 1,205,297 | 1,972,630 | ||
Total Current Assets | 142,681,526 | 140,204,589 | ||
Operating lease right-of-use assets | 4,927,810 | |||
Property and equipment, net | 3,533,038 | 2,545,192 | ||
Refundable income taxes | 435,000 | |||
Deferred income taxes | 486,664 | 279,318 | ||
Other assets | 229,552 | 249,575 | ||
Total Assets | 151,858,590 | 143,713,674 | ||
Current Liabilities: | ||||
Accounts payable | 12,364,039 | 9,902,481 | ||
Accrued expenses | 1,089,803 | 1,558,160 | ||
Contract liabilities | 3,279,843 | 3,588,500 | ||
Loss reserve | 216,606 | 216,606 | ||
Current portion of long-term debt | 2,506,099 | 2,434,981 | ||
Operating lease liabilities | 1,593,243 | |||
Income taxes payable | 253,798 | 115,000 | ||
Total current liabilities | 21,303,431 | 17,815,728 | ||
Line of credit | 23,738,685 | 24,038,685 | ||
Long-term operating lease liabilities | 3,837,678 | |||
Long-term debt, net of current portion | 3,601,883 | 3,876,238 | ||
Deferred income taxes | 4,028,553 | 4,028,553 | ||
Other liabilities | 531,124 | |||
Total Liabilities | 56,510,230 | 50,290,328 | ||
Shareholders' Equity (Deficit): | ||||
Common stock | 11,736 | 11,718 | ||
Additional paid-in capital | 70,917,811 | 70,651,413 | ||
Retained earnings (accumulated deficit) | 24,418,813 | 22,760,215 | ||
Total Shareholders' Equity (Deficit) | 95,348,360 | 93,423,346 | 74,313,333 | |
Total Liabilities and Shareholders' Equity (Deficit) | 151,858,590 | 143,713,674 | ||
Restatement Adjustments [Member] | ||||
Shareholders' Equity (Deficit): | ||||
Total Shareholders' Equity (Deficit) | (97,356,751) | (87,598,435) | ||
Restatement Adjustments [Member] | Revenue Recognition [Member] | ||||
Current Assets: | ||||
Contract assets | (100,971,165) | (95,744,625) | ||
Total Current Assets | (100,971,165) | (95,744,625) | ||
Total Assets | (100,971,165) | (95,744,625) | ||
Current Liabilities: | ||||
Contract liabilities | (3,190) | 1,664,079 | ||
Loss reserve | 2,820,076 | 3,446,952 | ||
Total current liabilities | 2,816,886 | 5,111,031 | ||
Total Liabilities | 2,816,886 | 5,111,031 | ||
Shareholders' Equity (Deficit): | ||||
Retained earnings (accumulated deficit) | (103,788,051) | (100,855,656) | ||
Total Shareholders' Equity (Deficit) | (103,788,051) | (100,855,656) | (86,621,280) | |
Total Liabilities and Shareholders' Equity (Deficit) | (100,971,165) | (95,744,625) | ||
Restatement Adjustments [Member] | Other [Member] | ||||
Current Assets: | ||||
Accounts receivable, net | 99,242 | |||
Inventory | (350,386) | (350,386) | ||
Total Current Assets | (350,386) | (251,144) | ||
Total Assets | (350,386) | (251,144) | ||
Shareholders' Equity (Deficit): | ||||
Retained earnings (accumulated deficit) | (350,386) | (251,144) | ||
Total Shareholders' Equity (Deficit) | (350,386) | (251,144) | (280,143) | |
Total Liabilities and Shareholders' Equity (Deficit) | (350,386) | (251,144) | ||
Restatement Adjustments [Member] | Income Taxes [Member] | ||||
Current Assets: | ||||
Refundable income taxes | (97) | (97) | ||
Total Current Assets | (97) | (97) | ||
Refundable income taxes | 434,903 | (97) | ||
Deferred income taxes | (486,664) | (279,318) | ||
Total Assets | (51,858) | (279,512) | ||
Current Liabilities: | ||||
Income taxes payable | (211,677) | (1,008) | ||
Total current liabilities | (211,677) | (1,008) | ||
Deferred income taxes | (4,028,553) | (4,028,553) | ||
Total Liabilities | (4,240,230) | (4,029,561) | ||
Shareholders' Equity (Deficit): | ||||
Retained earnings (accumulated deficit) | 4,188,372 | 3,750,049 | ||
Total Shareholders' Equity (Deficit) | 4,188,372 | 3,750,049 | $ (697,012) | |
Total Liabilities and Shareholders' Equity (Deficit) | $ (51,858) | $ (279,512) |
RESTATEMENT OF PREVIOUSLY ISS_5
RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS (Details 2) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Shareholders' equity (deficit) | $ (4,601,705) | $ (3,933,405) | $ (14,477,870) | $ (13,285,102) |
As Previously Reported [Member] | ||||
Shareholders' equity (deficit) | 95,348,360 | 93,423,346 | 74,313,333 | |
Restatement Adjustments [Member] | ||||
Shareholders' equity (deficit) | (97,356,751) | (87,598,435) | ||
Restatement Adjustments [Member] | Revenue Recognition [Member] | ||||
Shareholders' equity (deficit) | (103,788,051) | (100,855,656) | (86,621,280) | |
Restatement Adjustments [Member] | Other [Member] | ||||
Shareholders' equity (deficit) | (350,386) | (251,144) | (280,143) | |
Restatement Adjustments [Member] | Income Taxes [Member] | ||||
Shareholders' equity (deficit) | 4,188,372 | 3,750,049 | (697,012) | |
Common Stock [Member] | ||||
Shareholders' equity (deficit) | 11,736 | 11,718 | 8,924 | 8,864 |
Common Stock [Member] | As Previously Reported [Member] | ||||
Shareholders' equity (deficit) | 11,718 | 8,864 | ||
Additional Paid-in Capital [Member] | ||||
Shareholders' equity (deficit) | 70,917,811 | 70,651,413 | 54,026,496 | 53,770,617 |
Additional Paid-in Capital [Member] | As Previously Reported [Member] | ||||
Shareholders' equity (deficit) | 70,651,413 | 53,770,617 | ||
Retained Earnings (Accumulated Deficit) [Member] | ||||
Shareholders' equity (deficit) | $ (75,531,252) | (74,596,536) | (68,492,690) | (67,049,783) |
Retained Earnings (Accumulated Deficit) [Member] | As Previously Reported [Member] | ||||
Shareholders' equity (deficit) | 22,760,215 | 20,548,652 | ||
Retained Earnings (Accumulated Deficit) [Member] | Restatement Adjustments [Member] | ||||
Shareholders' equity (deficit) | $ (97,356,751) | (87,598,435) | ||
Retained Earnings (Accumulated Deficit) [Member] | Restatement Adjustments [Member] | Revenue Recognition [Member] | ||||
Shareholders' equity (deficit) | (86,621,280) | |||
Retained Earnings (Accumulated Deficit) [Member] | Restatement Adjustments [Member] | Other [Member] | ||||
Shareholders' equity (deficit) | (280,143) | |||
Retained Earnings (Accumulated Deficit) [Member] | Restatement Adjustments [Member] | Income Taxes [Member] | ||||
Shareholders' equity (deficit) | (697,012) | |||
Accumulated Other Comprehensive Loss [Member] | ||||
Shareholders' equity (deficit) | $ (20,600) | (14,800) | ||
Accumulated Other Comprehensive Loss [Member] | As Previously Reported [Member] | ||||
Shareholders' equity (deficit) | $ (14,800) |
RESTATEMENT OF PREVIOUSLY ISS_6
RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS (Details 3) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (934,716) | $ (1,442,907) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Depreciation and amortization | 209,261 | 153,297 |
Amortization of debt issuance costs | 36,953 | 21,392 |
Cash expended in excess of expenses | (28,012) | (17,692) |
Stock-based compensation | 330,787 | 210,028 |
Bad debt expense | 150,000 | |
Common stock issued as employee compensation | 45,913 | |
Changes in operating assets and liabilities: | ||
Decrease in accounts receivable | 2,139,417 | 1,245,407 |
(Increase) decrease in contract assets | (2,189,888) | 395,057 |
Increase in inventory | (1,378,998) | (49,100) |
Decrease in prepaid expenses and other current assets | 541,791 | 98,683 |
Increase (decrease) in accounts payable and accrued expenses | 1,993,200 | (3,388,922) |
Increase (decrease) in contract liabilities | (2,353,926) | 32,107 |
Decrease in loss reserve | (626,876) | (27,456) |
Increase (decrease) in income taxes payable | (71,871) | 868 |
Net cash used in operating activities | (2,332,878) | (2,573,325) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (210,695) | (156,006) |
Net cash used in investing activities | (210,695) | (156,006) |
Cash flows from financing activities: | ||
Payments of long-term debt | (603,037) | (418,306) |
Proceeds from line of credit | 2,000,000 | |
Payments of line of credit | (300,000) | |
Stock offering costs paid | (64,371) | |
Net cash (used in) provided by financing activities | (967,408) | 1,581,694 |
Net decrease in cash and restricted cash | (3,510,981) | (1,147,637) |
Cash and restricted cash at beginning of period | 6,128,142 | 1,430,877 |
Cash and restricted cash at end of period | 2,617,161 | 283,240 |
Supplemental disclosures of cash flow information: | ||
Cash paid during the period for interest | 551,635 | 429,614 |
Cash paid during the period for income taxes | 90,202 | |
Supplemental schedule of noncash investing and financing activities: | ||
Equipment acquired under financing lease | 399,800 | |
As Previously Reported [Member] | ||
Cash flows from operating activities: | ||
Net income (loss) | 1,658,598 | 1,256,765 |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Depreciation and amortization | 209,261 | 153,297 |
Amortization of debt issuance costs | 20,024 | 21,392 |
Cash expended in excess of expenses | (28,012) | (17,692) |
Stock-based compensation | 330,787 | 303,940 |
Common stock issued as employee compensation | 45,913 | |
Deferred income taxes | (207,346) | 405,000 |
Changes in operating assets and liabilities: | ||
Decrease in accounts receivable | 2,040,174 | 1,395,407 |
(Increase) decrease in contract assets | (7,416,427) | (2,865,025) |
Increase in inventory | (1,378,998) | (49,100) |
Decrease in refundable income taxes | 435,000 | |
Decrease in prepaid expenses and other current assets | 558,845 | 98,683 |
Increase (decrease) in accounts payable and accrued expenses | 1,993,200 | (3,247,776) |
Increase (decrease) in contract liabilities | (686,782) | 35,198 |
Increase (decrease) in income taxes payable | 138,798 | (109,327) |
Net cash used in operating activities | (2,332,878) | (2,573,325) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (210,695) | (156,006) |
Net cash used in investing activities | (210,695) | (156,006) |
Cash flows from financing activities: | ||
Payments of long-term debt | (603,037) | (418,306) |
Proceeds from line of credit | 2,000,000 | |
Payments of line of credit | (300,000) | |
Stock offering costs paid | (64,371) | |
Net cash (used in) provided by financing activities | (967,408) | 1,581,694 |
Net decrease in cash and restricted cash | (3,510,981) | (1,147,637) |
Cash and restricted cash at beginning of period | 6,128,142 | 1,430,877 |
Cash and restricted cash at end of period | 2,617,161 | 283,240 |
Supplemental disclosures of cash flow information: | ||
Cash paid during the period for interest | 551,635 | 429,614 |
Cash paid during the period for income taxes | 90,202 | |
Supplemental schedule of noncash investing and financing activities: | ||
Equipment acquired under financing lease | 399,800 | |
Restatement Adjustments [Member] | ||
Cash flows from operating activities: | ||
Net income (loss) | (2,593,314) | (2,699,672) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Amortization of debt issuance costs | 16,929 | |
Stock-based compensation | (93,912) | |
Bad debt expense | 150,000 | |
Deferred income taxes | 207,346 | (405,000) |
Changes in operating assets and liabilities: | ||
Decrease in accounts receivable | 99,243 | (150,000) |
(Increase) decrease in contract assets | 5,226,539 | 3,260,082 |
Decrease in refundable income taxes | (435,000) | |
Decrease in prepaid expenses and other current assets | (17,054) | |
Increase (decrease) in accounts payable and accrued expenses | (141,146) | |
Increase (decrease) in contract liabilities | (1,667,144) | (3,091) |
Decrease in loss reserve | (626,876) | (27,456) |
Increase (decrease) in income taxes payable | $ (210,669) | $ 110,195 |
RESTATEMENT OF PREVIOUSLY ISS_7
RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Accounting Changes and Error Corrections [Abstract] | ||
Recognition of misstated contract assets, contract liabilities and loss reserves | $ 103,800,000 | $ 100,900,000 |